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Aurora Cannabis stock is back on par with its Dec. 31 close, erasing a dismal start to the year that included questions about the marijuana company’s balance sheet and a call for a new chief executive.

An analyst at Cowen said she expects the company to focus on controlling capital spending and to restructure its debt.

The back story. The stock (ticker: ACB) has fallen 72% from a year ago, as growing skepticism surrounding pot stocks hit Aurora especially hard because of debt and cash-flow concerns.

Earlier this month, Cantor Fitzgerald analyst Pablo Zuanic suggested that Aurora’s strategic advisor, Nelson Peltz, help find a well-known CEO who would bring greater financial discipline. Two analysts lowered their Neutral ratings and price targets to $1 for the stock, raising concerns about the company’s cash flow and its ability to meet financial covenants in its 400 million Canadian-dollar (US$306 million) credit facility.

Zuanic called the ensuing dip a buying opportunity and reiterated his bullish view on the stock. The stock soared almost 15% to $2.05 on Wednesday, bringing its year-to-date dip to 5%.

What’s new. Cowen analyst Vivien Azer wrote in a note to clients Thursday morning that she attended investor meetings at this week’s ICR Conference. She said management told investors it was working with creditors to restructure its debt. It will also focus on items it can control, such as sales, general and administrative expenses, and capital spending.

She noted that disappointing fiscal first-quarter revenue was attributed to “congested channel inventory, mostly for value-based dry flower and oil/capsules products but also from initial inventory loading in anticipation of Ontario opening additional locations that has yet to occur.”

Looking ahead. Azer maintained an Outperform rating with a C$6 (US$4.61) price target. The stock was up 6.8% to US$2.19 in premarket trading Thursday, erasing its 2020 losses. Dow Jones Industrial Average futures were up 0.3%.

One major test for all Canadian growers will be consumer response to the newly introduced Cannabis 2.0 products. Aurora called the consumer response to such new products “fantastic,” adding that sales of gummies and chocolates exceeded expectations, according to Azer. Demand for vapes are in line with expectations, though Azer noted Alberta and Quebec aren’t yet permitting their sale, while British Columbia has a 20% tax on them.

She said Aurora’s international segment has taken longer to develop than anticipated. Management is upbeat about its long-term opportunity, but is more cautious in the near term. She sees 61% revenue growth to C$23 million in fiscal 2020 for international.

Write to Connor Smith at connor.smith@barrons.com