In the past three months, shares of Tilray Brands TLRY have skyrocketed 94.5%, significantly outperforming the industry’s 2.5% decline.

TLRY stock has risen following a CNBC report citing optimism over potential federal rules for hemp-derived products and indications that President Donald Trump may relax marijuana restrictions. Shares have also risen on the back of the company achieving a record first-quarter net revenues of $210 million and a strengthened balance sheet.

The stock’s exceptional performance has left investors wondering whether to buy, hold or sell it. Let’s delve into the company’s fundamentals to gain a better understanding of how to play the stock amid this price rally.

Tilray Medical’s Expanding Global Footprint 

Tilray Medical, a division of Tilray Brands, continues to expand its global medical cannabis footprint with key international developments. Through its joint venture with Top Tech Global Inc., the company established Solana Life Group in Panama, which has obtained regulatory approval to cultivate, manufacture, and distribute medical cannabis locally. Through this partnership, Tilray Medical aims to launch and expand the availability of medical cannabis products across Panama, improving access for patients in need.

TLRY also broadened its European presence by launching five new cannabis flower products in Germany, produced at its EU GMP-certified Neumünster facility. Also, the company’s wholly owned subsidiary, FL Group S.R.L, entered a strategic partnership with Italy’s Molteni to broaden the availability of Tilray Medical cannabis extracts for patients across Italy.

In Australia, Tilray Brand introduced its first medical cannabis edible, Good Supply Pastilles, a sugar-free, vegan-friendly option, underscoring its commitment to innovation and patient-focused treatment solutions worldwide.

Improved Net Income in Q1

Tilray Brands reported a strong improvement in profitability in the first quarter of fiscal 2026, achieving net income of $1.5 million compared to a net loss of $34.7 million in the year-ago period. The turnaround reflects the company’s continued focus on cost discipline, operational efficiency, and portfolio optimization. Adjusted net income also improved significantly to $3.9 million from an adjusted net loss of $6 million a year earlier, driven by lower SG&A expenses and reduced amortization. 

Other Players in the Cannabis Space

Tilray Brands competes in an overcrowded market. It faces stiff competition from its peers, like Village Farms International VFF and Curaleaf Holdings CURLF, both of which are also pursuing international expansion and cost optimization strategies. As TLRY gains ground in international markets, competitive responses from Village Farms and Curaleaf could intensify.

Estimates for TLRY 

The Zacks Consensus Estimate for fiscal 2026 sales implies a year-over-year improvement of 6.8%. Per the Zacks Consensus Estimate, loss per share for fiscal 2026 is expected to deteriorate 600% year over year. However, in the past 30 days, Tilray’ loss per share estimate for fiscal 2026 has moved north 6 cents. 

Key Challenges for TLRY

Tilray Brands is at an important point where changing global economic conditions could challenge how well its growing business can hold up. Despite continued momentum in revenues and profitability, the company struggles with persistent price compression and regulatory friction in Canada, including elevated excise taxes and constrained retail channels for cannabis beverages. These structural challenges could pressure margins in select business lines.

Across Europe, Tilray’s growth is facing some short-term challenges from permit delays in Portugal and quota restrictions in Germany, limiting cross-border cannabis distribution. Meanwhile, currency volatility, particularly the strengthening euro, might be an additional headwind to the company’s top-line performance. 

Despite these headwinds, Tilray continued to execute its cost-optimization initiatives and strengthen its balance sheet, enabling the company to deliver a positive net income and maintain a stable outlook for fiscal 2026. 

TLRY Stock Discounted Valuation

With a forward one-year price-to-sales (P/S) of 1.52X, Tilray’ shares are trading at a discount compared with the industry average of 3.16X. It has a Value Score of D at present. 

How to Play TLRY Stock?

While Tilray Brands continues to face regulatory and macroeconomic challenges across Canada and Europe, its strong fiscal first-quarter results, expanding global medical footprint and improved profitability highlight its steady progress. Investor optimism around potential U.S. policy shifts and sector tailwinds has further fueled the stock’s impressive rally. With this, Tilray Brands appears well-positioned to sustain its momentum and build on its recent gains.

With its cheap valuation and a Zacks Rank #2 (Buy), TLRY could serve as a selective play for investors seeking exposure to the industry’s gradual rebound. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research