Aphria Stock Poised to Outperform: Analyst

Aphria Inc. (NYSE:APHA) (TSX:APHA), one of the Canadian marijuana stocks, has a sizable cash position and should benefit from rising cannabis demand

SmallCapPower | March 30, 2020: BofA Securities Analyst Christopher Carey recently upgraded shares of Aphria Inc. (NYSE:APHA) (TSX:APHA), one of the Canadian cannabis stocks, from ‘Neutral’ to ‘Buy’ but lowered the price objective from US$8 to $5.

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The analyst cited the Company’s significant cash and equivalents position of C$497.7 million (as of November 30, 2019), which represents about 40% of its market capitalization, in addition to rising cannabis demand, especially during this time of social distancing.

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During its most recently-reported quarter (Q2 2019), Aphria recorded net revenue of $120.6 million, a 457% year-over-year increase, while Adjusted EBITDA from cannabis operations surged 155% quarter over quarter to $3.4 million.

Aphria is well positioned for international growth with operations in in Germany and South America. On January 14, 2020, the Company provided its outlook for 2020, saying it forecasts net revenue of about $575 million to $625 million, with Adjusted EBITDA of approximately $35 million to $42 million. Given the recent COVID-19 environment, however, investors should be prepared for a significant change in these numbers.

Aphria shares have bounced back about 69% from its recent low of US$1.95 to its current price of $3.29.