Personal Price Target It's getting late, sorry for typos I can't see. Anyone want to take a stab at their realistic expectations for Aphria/Tilray beyond the ones found online? Price targets are only 12 months and I plan to hold longer (yes, I see you haters saying zero, you're hilarious). I'm in grad school so plan to have my investments pay off my student debt and have a down payment for a house somewhere mid-2023 onwards so I'm using 2024 as my calculation. In the COVID market meltdown I had to put it in something I knew would be around beyond a year from now so I wouldn't let my emotions take over and thank god I did LOL High risk High reward... Cheers to the longs over the last year :)
https://cannabusinessplans.com/canadian-cannabis-market/
I think if the Canadian market is between 4.9 and 8.7 billion CAD we could call the middle 6.8 billion. We finally passed the legal market being >50% compared to illegal market. That gets us to 3.4 billion recreational which is within the 2-4 range said in the link above. So with a few variables of percentages of market share (20%, 25% and 30% which Irwin Simon plans to get to after the merger I'll use 20% from the growth and large Ontario roll out continuing. The analyst I follow closest conservatively measures Enterprise Value at 15% margins for American MSOs and 20x multiples but since Aphria is north of 45% gross margins let's raise it to 20% since Aphria runs a little more effectively in the industry and it's not an outrageous bump.
(6.8 x 50% x 20% x 20% x 20 = 2.72 billion CAD alone for Canadian rec). With 316.75M shares outstanding that puts us as $8.58 per share. I think that's a reasonable valuation and considering the stock price is $8.80 right now heading into 2020, we should be done our pullback now I hope and this sets us up for a great starting point. I think we're right where we should be valued, and that's no exaggeration yet or including things like CC Pharma, debt, assets etc...
https://cannabusinessplans.com/legal-cannabis-europe/
https://mugglehead.com/cannabis-market-will-triple-by-2024-pot-stocks-will-rebound-report/
These two links have Europe's 2024 market close enough to each other but the second includes global sales as well. If by 2024 Europe's market is 2.4 billion Euros (3.74 billion CAD) or global, non-American sales at 5.4 billion USD (6.86 billion CAD) and Canada's is 6.2 billion USD (7.88 billion CAD) that's 14.74 billion CAD in Canada+global. So let's say we achieve Simon's goal of 30% Canadian market share by then and I dont know 10% globally, just a number and conservative since we can't be #1 everywhere. Combined with Tilray's shares by then we would have 475.01M shares outstanding.
(7.88 x 30% x 20% x 20 = 9.45 billion EV for Canadian market)
(6.86 x 10% x 20% x 20 = 2.75 billion EV for Europe)
12.2 billion EV divided by 475M shares = $25.68 per share which is 192% gain in the next 3-4 years which is 30-40% growth per year. With such a fast growing company and industry I don't think it's unlikely.
In the grand scheme of things with so many moving pieces I think I'll keep it simple and say future dilution is a wash for all the other distribution, alcohol and CBD revenue we will have on our books because I haven't done Tilray's books or alcohol or CBD market growth yet. I do trust Aphria's management to handle Tilray's debt in such a low interest rate environment. Considering a quick search says beer will increase 13% and CBD 40% per year by 2024 "a wash" is super pessimistic and I'm keeping my hopes low for US legalization.
https://www.businesswire.com/news/home/20200709005462/en/Craft-Beer-Market-2020-2024-New-Product-Launches-to-Boost-Growth-Technavio
https://www.medgadget.com/2020/11/cannabidiol-cbd-oil-market-2020-industry-size-share-price-trend-and-forecast-to-2025.html#:~:text=The%20global%20market%20for%20cannabidiol,the%20period%20of%202020%2D2025.
And to be honest with $25.68 as my pessimistic price target I would only need a few things to go right to add another 50% premium ($38.52 per share, 18.3 billion CAD market cap or 14.4 billion USD market cap is not absurd) for 2024. We start with Georgia!!!!!
Good luck longs!!!!