While most other stocks in the cannabis industry have been reporting losses each quarter, Aphria Inc. (APHA) has bucked the trend. Aphria Inc. was the first profitable large-cap Canadian cannabis producer in 2019.
Cannabis investors are hoping to see another solid quarter from Aphria when it releases its quarterly earnings report on January 14th. If Aphria can deliver a solid quarter, it would be great not only for the company but it could bring some much-needed optimism back to the overall cannabis sector.
However, that might not happen. Canadian marijuana sales are up only slightly over the last few months. Therefore, it’s not prudent for investors to expect much in the way of upside sales from Aphria.
As a result, investors are only hoping for sequentially stable revenues from the company. The key to this earnings report is for Aphria to show strong financial targets for its fiscal year that ends in May.
The challenge Aphria will face is how it will navigate the cannabis market over the next few months because it will be several months before major catalysts kick in that will help the company’s bottom line.
New retail locations in Ontario, Canada don’t plan to open until April. And Cannabis 2.0 products have had slow rollouts and many key Canadian provinces have blocked the sale of vape products.
So in the near term, we could see a guidance cut but the company could maintain strong estimates going into 2021.
Yet, even with these near term challenges, Wall Street analysts are bullish on Aphria. According to MarketBeat.com, “7 Wall Street analysts have issued ratings and price targets for Aphria in the last 12 months. Their average twelve-month price target is $12.85, suggesting that the stock has a possible upside of 166.60%. The high price target for APHA is $22.75 and the low price target for APHA is $6.50. There are currently 1 sell rating and 6 buy ratings for the stock, resulting in a consensus rating of “Buy.””
We will be watching this earnings release closely, as Aphria is one of our favorite cannabis stocks. It’s a well managed company that has outperformed its larger competitors and we expect great things from Aphria in the long run.
(Disclosure: The author owns shares of Aphria)
APHA shares were trading at $4.94 per share on Friday afternoon, up $0.11 (+2.28%). Year-to-date, APHA has declined -5.36%, versus a 1.17% rise in the benchmark S&P 500 index during the same period.
About the Author: Aaron Missere
Aaron is an experienced investor who is also the CEO of Departures Capital. His primary focus is on the cannabis industry. He also hosts a weekly show on YouTube about marijuana stocks. Learn more about Aaron’s background, along with links to his most recent articles. More...
