It has not been a good year for Aurora Cannabis (NYSE:ACB) CEO Terry Booth. On his watch, ACB stock has lost around 67% of its value in the past year. More importantly, the company has failed to deliver on many of its promises it made to shareholders over the past two years.

Cantor Fitzgerald analyst Pablo Zuanic believes one way to stem the bleeding at Aurora is to replace Booth as the company’s chief executive with somebody more familiar with operating growth businesses.

In Zuanic’s opinion, the company’s senior management is bloated. An excellent first move was sending Cam Battley, its chief corporate officer, packing on Dec. 21. 

“We understand that Mr. Battley’s departure was not voluntary and thus see potential for ACB to turn the corner regarding reconciling its long-term ambitions with a more realistic approach to managing its near-term profitability and cash flow,” Zuanic wrote in a note to clients Jan. 2.

However, to ensure Aurora Cannabis lives to fight another day, Zuanic sees a change at the top helping stem the tide. 

“We think current CEO Terry Booth could take the role of chairman, Glen Ibbott should stay as CFO, and the new CEO could rationalize what we deem to be a bloated senior management structure,” he added. 

Where Does ACB Stock Go From Here?

In his note to clients, the analyst cut his price target to $5 from $5.85. At current prices, that’s still nearly 190% upside over the next 12 months. 

Although Terry Booth deserves much of the credit for getting Aurora to this point in its development, it might be time to let someone else do the heavy lifting required to turn it from growth story to a mature and profitable company.

While it’s hard to imagine Aurora without Booth at the helm, Zuanic might be onto something — and here’s why.  

He’s No Bruce Linton

Say what you will about former Canopy Growth (NYSE:CGC) co-CEO Bruce Linton, but it’s hard to deny the legacy he built as the founder of Canada’s largest cannabis company. 

During his tenure, Linton did two things that stand out for me.

First, he managed to secure the company’s financial future by selling a control position to Constellation Brands (NYSE:STZ), allowing it to survive what has been a crazy 21 months since pot was legalized in Canada. 

Secondly, he managed to snag a deal with Acreage Holdings (OTCMKTS:ACRGF) that gives Canopy the right to buy it for $3.4 billion — if, and only if, the U.S. federal government legalizes cannabis before October 2026. 

It might not look like a great deal, given Acreage’s current market capitalization is less than $600 million. However, should the legalization happen, valuations across the U.S. will fly through the ceiling. Being ahead of the curve gives ACRGF financial certainty in a very uncertain industry — and that, to me, is priceless.

Despite Linton being the soul of the company, and him making a couple of moves that could cement Canopy’s future, Constellation still felt it was necessary to bring in their own person to ensure it got on the pathway to profitability. 

Which Brings Me to Terry Booth

Opposite to Linton, Booth hasn’t been nearly as creative in his role as CEO. Moving up to chairman would ensure that he stays with Aurora through a difficult period, while letting someone else with a more appropriate skill set to guide the company to the next level. 

At $2 per share, Aurora must get this right. The status quo won’t cut it with investors. Relieving Battley of his duties was a good first move, but more need to follow. 

Zuanic has suggested that Aurora get strategic advisor Nelson Peltz more involved in the day-to-day operations, perhaps finding a new CEO and a possible sugar daddy with ties to the consumer packaged goods (CPG) sector. 

I like both ideas. However, it’s a bit of a chicken and egg situation. 

Terry Booth might agree to move up to the chairman’s role and work with the board to find his replacement. The problem is, however, that should it find a CPG company to take a stake in Aurora, they’re going to want to be a part of the CEO-selection process. 

So, if you hire the CEO first, the valuation goes down because you’ve removed your future partner from the hiring process. That’s never an attractive way to enter a partnership. 

That said, Aurora’s board should set up a special committee with Booth on it to find a well-funded, strategic investor. Once that investor is found and an investment is made, it should start looking for a new CEO.

The Bottom Line on ACB Stock

I don’t often agree with analysts, but in this instance, Zuanic is on the money. A new partner and a new CEO would do wonders for ACB stock.

The question is whether Nelson Peltz is going to step up to the plate. Over the next few weeks, I think we’ll get our answer. And for shareholder’s sake, it better be good news. 

At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.