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Aurora Cannabis is on track to be the one of the first big marijuana firms to turn a profit. That could come as soon as this quarter, according to Cowen analyst Vivien Azer.

The back story. Aurora Cannabis sold 9 metric tons of marijuana last quarter, but that wasn’t enough to beat Wall Street’s bar for revenue and adjusted earnings. At the time, BMO Capital Markets analyst Tamy Chen was concerned about a lack of supply that could hinder its path to profitability.

Aurora stock (ticker: ACB) closed at $9.25 3 months ago. Since then it has shed a fifth of its value, sinking to $7.30 at Friday’s close. Some have been bullish, Bank of America Merrill Lynch and Cowen among them, while others, including Stifel’s Andrew Carter, prefer rival Canopy Growth.

What's new. Azer called Aurora stock her top marijuana pick, in a note to clients on Monday. She wrote that while other firms struggle with larger losses, Aurora could reach positive earnings before interest, taxes, depreciation, and amortization, or Ebitda, this quarter. Compare that with Canopy, which posted an expanded Ebitda loss of 98 million Canadian dollars (US$74.3 million) when in reported fiscal fourth quarter earnings last week.

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“At a time when EBITDA losses across the industry are elevated, we have a strong appreciation for ACB’s operational rigor,” Azer wrote.

She noted that Aurora holds a No. 2 position in recreational-use revenue and is among the best at keeping a variety of products in stock in Ontario, British Columbia, and Alberta. She also said it has the largest cultivation footprint in Canada, which gives the company the infrastructure to increase its revenue in the medical market during a weaker recreational market.

Aurora stock closed up 2.9% on Monday, to $7.51 per share, while the S&P 500 was largely flat.

Looking ahead. Azer maintained an Outperform rating, noting that it should trade at a premium to its peers “given its near term path to profitability in conjunction with strong early stage execution within the nascent Canadian cannabis adult use market.”

She said that as the recreational-use market evolves, she looks for better industry supply to support bricks-and-mortar stores and draw more market share from illicit sellers.

Health Canada will also begin evaluating second-wave Cannabis products, such as vapes and edibles, in October. The process will take 60 days, meaning those products wouldn’t hit the shelves until at least mid to late December. When that does happen, Azer expects Aurora to focus its efforts on vapor, although “they will likely carry a diverse portfolio of products.”

She said Aurora could add revenue via its operations in Germany and Australia, and attract a big-time strategic partner “likely brokered by strategic advisor Nelson Peltz.”

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