Aphria Stock is running ahead of next week’s earnings report and an analyst upgrade. Cantor Fitzgerald analyst Pablo Zuanic raised the firm’s price target on Aphria (APHA) to C$15.50 from C$12.50 and keeps an Overweight rating on the shares. For US investors, this implies a price a target of US$11.69 for Aphria stock.
Zuanic expects the August/September quarter in Canada to show market growth acceleration sequentially, with companies like Aphria and Canopy Growth (CGC) beating expectations. The analyst sees a buying opportunity with Aphria stock recent underperformance but thinks shares will rally when it reports August quarter results the week of October 12.
In this article, we take a look at the bull case for Aphria stock and why we at Insider Financial like it as a turnaround play.
First up, here’s a little background info for anyone not familiar with Aphria stock. Aphria Inc. is a leading global cannabis company headquartered in Leamington, Ontario – the greenhouse capital of Canada. Aphria Inc. has been setting the standard for the low-cost production of high-quality cannabis at scale, grown in the most natural conditions possible.
Aphria Stock Bull Case
Aphria stock just launched the B!NGO budget brand at the lowest price per gram, allowing them to offload a ton of built-up inventory. They now have products at all price points (Broken Coast, Riff, Solei, Good Supply, and B!NGO). More crucially, this starves Aurora, Canopy, and other cannabis players of their own inventory sales.
Ontario is also opening 40 stores a month, double the previous 20 stores per month target. Things are picking up rather quickly. Sales are growing across the country, with expectations of hitting $2B soon, and that’s without Ontario reaching the 1,000 store mark.
We think the market is finally fixing up a lot of regulation issues. Aphria is releasing it’s huge inventory build, to the detriment of its competition. Sales are growing at a faster rate. There’s more stability now than the patchwork of regulations in the US with the MSO’s. Aphria is priced dirt cheap like it’s about to die, and yet the company is beating the competition.
Aphria’s Sativa, Indica, CBD oil, and other products won seven Canadian Cannabis Awards last year.
In addition, Aphria stock also has a robust portfolio of vape products, with its Good Supply brand reaching No. 1 in popularity in three major provinces. The company’s vape segment accounts for about 29% of the entire market in Canada.
Aphria also has a growing international segment emphasizing operations in Germany and Latin America. One of the company’s subsidiaries, CC Pharma, now imports and distributes medical marijuana to 13,000 out of about 19,000 retail pharmacies in Germany.
With CA$497.2 million in cash and cash equivalents on the books, Aphria sets itself apart from the rest of the cannabis industry, generating some of the strongest sales growth, maintaining one of the strongest balance sheets and cash positions, compelling consumer brands, and a well-diversified global business.
Aphria Stock Bottom Line
Currently trading with a market cap of US$1.35 billion, Aphria stock is an exciting play in pot land. We believe overall market sentiments have changed and we are about to embark on a new epic bull run for cannabis names. With its market-leading position and top-quality assets, Aphria looks set to lead the way. Aphria stock is one name that belongs in every cannabis investor’s portfolio.
Good luck to all (except the shorts)!
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Disclosure: We have no position in NASDAQ:APHA, or any of the securities mentioned. We wrote this article ourselves and it expresses our own opinions. We are not receiving compensation for it. We have no business relationship with any company whose stock is mentioned in this article. Insider Financial is not an investment advisor and does not provide investment advice. Always do your own research and make your own investment decisions. This article is not a solicitation or recommendation to buy, sell, or hold securities. This article is meant for informational and educational purposes only and does not provide investment advice.