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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

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Post by Interpolation1on Oct 09, 2016 11:04am
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Post# 25326773

PRICE TARGET RAISED

PRICE TARGET RAISED

Medical marijuana producer Aphria gets price target raise at PI

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aphriaA better than expected quarter has PI analyst Jason Zandberg revisiting his price target on Aphria (TSX:APH).

On Friday, Aphria reported its Q1, 2017 results. The licensed medical marijuana producer earned $895,269 on revenue of $4.37-million. The numbers were a solid beat over the same period a year earlier when it lost $476,825 on a topline of $950,740.

“Aphria continues to deliver on all operating metrics,” said CEO Vic Neufeld of the quarter. “Patient onboarding, harvest yields, delivering in-demand strains, kilograms sold and low production costs have again generated stellar top-line and bottom-line results. Completion of the part II expansion remains on schedule. Part III expansion just kicked off in the last two weeks. With expected annualized yields increasing to 18,000 kg upon completion of the expansions, Aphria is strategically positioned for continued sustainable growth.”

Zandberg notes that the results from Aphria bested his expectations of $0.01 a share in earnings and EBITDA of $1.0-million on revenue of $3.3-million. The analyst says the beat was likely due to the fact that Aphria has become the seller of choice for other licensed producers.

“Grams of MMJ sold during the quarter were 585,200 –we had modelled 408,480 grams,” notes the analyst. “The average selling price per gram was $7.48, slightlv lower than the price of $8.16 reported in Q4 FY16 (ending Mav 31). The reason for the lower average selling price per gram reported this quarter is likelv due to strong wholesale business. Aphria sells to other licensed producers at a wholesale price of $3.75 – $4.25. The wholesale business was particularlv strong during Q1 as several LPs had demand that exceeded internal production.”

In a research update to clients Friday, Zandberg maintained his “Buy” rating on Aphria but raised his one-year price target on the stock from $3.75 to $4.25. He pegs the risk level at “Speculative”.)

Zandberg believes Aphria will post net income of $4.24-million on revenue of $23.48-million in fiscal 2017, numbers he expects will climb to net income of $7.8-million on a topline of $43.41-million the following year.

Shares of Aphria closed Friday up 7.8 per cent to $3.58.


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