Despite the minor pullback in earnings this past quarter for Aphria (APHA), the company has been a powerhouse when it comes to generating revenues. The company has been consistently pulling in millions of dollars from the European market and it sounds as if things just got even better for the company.
Aphria announced that they have recently achieved GMP status in the European Union. This will allow the company to start selling medical cannabis to pharmacies in Germany and other countries. This will enable the company to take advantage of its growing facilities in Canada and scale the business even further.
The GMP certification stands for Good Manufacturing Practices. This is essential for the company to enter the European markets. The company expects to start shipping products in the fourth quarter of fiscal 2020.
Jefferies analyst, Owen Bennett, was very bullish on the news. He said achieving GMP status strengthens the case for Aphria remaining his top pick among the Canadian cannabis companies. Benett also mentioned that, “For us, the most encouraging aspect of Aphria’s delivery to date is the sustained demand it is seeing for its brands in the recreational channel, with this translating to impressive share gains.”
Owen went on to state that, “Not only does this look good for the introduction of 2.0 products, it also positions the company well for its upcoming step change in capacity once Aphria Diamond products are introduced to the market in Q4.”
We agree that this is an exciting time to receive this certification, with companies just getting started with their Cannabis 2.0 market product line-ups. There could be more upside for Aphria as an elimination of the vape bans in Alberta and Quebec takes effect. The company is also working on launching beverages in fiscal 2020, which could provide another source of revenue.
On Tuesday Aphria also received some new coverage by analyst Aaron Grey at Alliance Global Partners. Grey initiated coverage on Aphria with a buy rating and C$11 price target. The analyst mentioned that Germany is one of the company’s largest opportunities. Grey stated that, “We look for fundamentals to improve from continued success in the Canadian market and beginning of sales in Germany – and see potential partnerships within the US and other markets as a potential catalyst for the stock,”
Shares of Aphria have bounced significantly off of their 52-week lows of $3.76 that it hit back in November. As the market matures and opens up, this will give Aphria the chance to grow revenues not only in Canada but internationally. Their recent EU-GMP certification is very good news and Aphria remains one of our top cannabis stocks to watch for this year.
(Disclosure: The author owns shares of Aphria)
APHA shares were trading at $5.58 per share on Wednesday morning, up $0.26 (+4.89%). Year-to-date, APHA has gained 6.90%, versus a 3.14% 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...
