Aphria stock jumps 10%, analyst dubs the pot company ‘belle of the ball’

Jeff Lagerquist
·2-min read
(Aphria/YouTube)
(Aphria/YouTube)

Shares of Canadian cannabis producer Aphria (APHA.TO)(APHA) climbed more than 10 per cent on Thursday, extending the week’s gains as analysts heap praise on the company ahead of its quarterly earnings release next week.

Toronto-listed shares hit $7.56 in early trading, their highest level since a spike in late July. The momentum behind the Leamington, Ont.-based company comes as analysts from CIBC and Cantor Fitzgerald point to market share gains in Canada over the past year and promising international exports.

Aphria shares trade on the Toronto Stock Exchange on Thursday, Oct. 8, 2020.
Aphria shares trade on the Toronto Stock Exchange on Thursday, Oct. 8, 2020.

Aphria shares have climbed more than 60 per cent in the past six months, vastly outperforming the Horizons Marijuana Life Sciences Index ETF (HMMJ.TO) and the world’s most valuable pot company Canopy Growth (WEED.TO)(CGC), which have gained about nine per cent and one per cent respectively in that timeframe.

“In a consolidating Canadian industry, we continue to think Aphria is the ‘belle of the ball,’” Pablo Zuanic of Cantor Fitzgerald wrote in a note to clients earlier this week, highlighting the company’s leading position in Canada’s recreational market. “We expect Aphria shares to rally when the company reports its August quarterly results.”

CIBC analyst John Zamparo echoed that sentiment on Thursday, calling Aphria “the clear market share leader nationally, and in key provinces such as Ontario, where retail sales growth should outpace the rest of the country due to under penetration of [cannabis] stores” in a note to clients.

Aphria announced on Wednesday the completion of its first shipment of EU-GMP certified cannabis to its German subsidiary CC Pharma. In August, it announced a strategic supply agreement with Israeli medical cannabis producer Canndoc.

The company said it is strategically positioned in the two largest cannabis markets outside of Canada, with the United States being fragmented into state-level markets. Zuanic expects Aphria to begin reporting international cannabis revenue as soon as the first half of fiscal 2021.

Aphria is scheduled to report its first quarter fiscal 2021 financial results on Oct. 15.

Zamparo is calling for revenue of $155 million, up two per cent from the previous quarter. He expects net cannabis revenue of $60 million, up 14 per cent quarter-over-quarter. The stock jumped past his $7.50 price target on Thursday. Zuanic has a more bullish $15.50 price target.

Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.

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