Canadian marijuana producer Aurora Cannabis has been given an “underperform” rating again by Jefferies after the company filed to issue $1 billion of securities.

This week the company filed a shelf registration with the Securities and Exchange Commission to issue up to $1 billion of securities.

According to Aurora Cannabis’ press release, the base shelf prospectus when made final, will qualify common shares, preferred shares, warrants, subscription receipts and debt securities up to U.S.$1 billion during the 25-month period that the base shelf prospectus remains effective.

Management believes the filing of this new Base Shelf Prospectus is in the best interest of shareholders and provides maximum flexibility to pursue strategic initiatives, which may include acquisitions or partnerships pursuant to the Company’s previously stated global growth strategy.

“We had recently flagged the need for additional capital for a US push and therefore, given how critical the US is, this announcement should be viewed as welcome,” analyst Owen Bennett said to clients in a note.

“What it does confirm, however, is the disconnect between the Aurora, and broader Canadian, valuations and reality. The current multiple already arguably reflects some degree of US success, but that success has to be won first,” he added.

Bennett had written recently that Aurora needed more cash to compete in the U.S. CBD space, never mind the U.S.

The analyst said he expected institutional investors would avoid the stock in favor of U.S. multi-state operators, given the growing expectations of reforms of the U.S.’ strict cannabis laws.

“We would suggest that this $1bn shelf, viewed alongside a recent $2bn shelf announced by Canopy CGC, +7.43% WEED, +6.68%, confirms the task at hand for Canadian operators to be able to establish a strong US foothold,” he wrote in the note.

“We would also note here that Canopy already has a cash balance of C$825mn. While Aurora had a cash balance of C$565mn as end of Q2, it has debt of C$187.6mn due <12 months, and another C$144mn 1-3 years.”

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