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Aphria Inc. APHA

Aphria, which is headquartered in Ontario, produces and sells medicinal and recreational cannabis. The company operates through retail and wholesale channels in Canada and internationally. Aphria is a main distributor of medical cannabis to Germany and has operations in over 10 countries outside of Canada. However, it does not have exposure to the U.S. CBD or THC markets due to the constraints of federal prohibition. It has some U.S. exposure through the acquisition of SweetWater, a craft brewer


NDAQ:APHA - Post by User

Post by Akattackon Aug 18, 2020 1:24pm
353 Views
Post# 31423661

Analyst Upgrade

Analyst UpgradeIn response to recent share price depreciation, CIBC World Markets analyst John Zamparo raised his rating for Aphria Inc. (APHA-T) to outperformer from neutral. There is no fundamental change to our thesis on APHA, but the 8-per-cent decline in the stock since the company reported its FQ4 results now creates an attractive 25-per-cent upside to our target, he said. The company continues to take market share, and now touts a #1 spot in Ontario and Alberta. Its capital allocation has improved, as the company has jettisoned plans to spend over $40-million on the LATAM market. Finally, the company has visibility to an important achievement, which is generating positive operating cash flow and FCF in the next two and three quarters, respectively. While some Canadian cannabis firms have accomplished this on occasion, we believe APHA may be able to sustain this level of performance. The primary risk to our thesis is the existing US$100-million at-the-market equity offering. But we believe the 17 million shares that are to be tendered reflect a reasonable amount at more than 2 times ADV. Mr. Zamparo maintained a $7.50 target. The average on the Street is $9.05. At the same, Mr. Zamparo lowered his financial projections for Aurora Cannabis Inc. (ACB-T) and Hexo Corp. (HEXO-T), prompting him to lower his target price for those stocks. Estimates are unchanged for the soon-to-be-reported quarters, but we have reduced our F2021 and F2022 sales forecasts for each company, he said. For ACB, our F2021 estimate declines by 8 per cent, while our F2022 forecast declines by 10 per cent. For HEXO, our sales estimates in F2021 and F2022 decline by 8 per cent and 14 per cent, respectively.
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