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Aphria: Analysts’ Target Price and Ratings

Aphria (APHA) stock has gained since it reported strong fourth-quarter results in August. The stock has gained 9.6% since its earnings. Let’s take a look at analysts’ target price and ratings.

What are analysts saying about Aphria?

After Aphria reported its fourth-quarter results, some analysts updated its target price. Usually, a change in the target price and ratings tell us how a company is doing. Analysts also provide an outlook for the stock. After the strong fourth-quarter results, Jim Cramer, CNBC’s Mad Money host, dropped Canopy Growth as one of his favorite choices. Previously, he favored Cronos Group and Canopy Growth. He favored Aphria over Canopy Growth. As of 9:34 AM EST, the stock has risen 0.67% today.

Notably, CIBC increased its target price to 7 Canadian dollars from 6.5 Canadian dollars. Meanwhile, Haywood Securities cut its target price to 14.5 Canadian dollars from 16 Canadian dollars. Bryan Garnier cut the target price to 18 Canadian dollars from 23 Canadian dollars.

Target price update  

The number of analysts covering Aphria stock didn’t change before the results. The consensus target price for the stock fell to 14.9 Canadian dollars from 15.19 Canadian dollars before the company’s earnings—a fall of 1.9%. Aphria’s current revised target price means a potential upside of 98% over the next 12 months.

Peers’ earnings

Canopy Growth (CGC) (WEED) also reported disappointing first-quarter earnings in August. The company missed analysts’ estimates by a wide margin and reported huge losses during the quarter.

In contrast, Cronos Group (CRON) reported strong second-quarter revenues. The stock beat analysts’ revenue estimates. However, wide losses didn’t impress investors. The higher cost of sales widened the company’s operating loss during the quarter. Cronos Group also reported a negative adjusted EBITDA of 17.8 million Canadian dollars.

 

Tracking Aphria’s trend 

During the past 12-month period, Aphria stock received increased coverage from analysts due to its strong fundaments.

The company has a positive outlook for fiscal 2020. Also, Aphria expects to fulfill its annual production capacity after all of its facilities are fully licensed. The expectations might have increased analysts’ confidence. To learn more, read Aphria Has Analysts Feeling Optimistic—Here’s Why

The number of analysts covering Aphria stock increased from seven to 12 during this period. Also, analysts provided more “buy” recommendations.

However, Aphria’s target price fell gradually during this period. The cannabis industry faced many hurdles in the last few months. Canopy Growth reported dismal results, which impacted the sector and made investors doubt the sector’s growth. CannTrust’s (CTST) regulation issues had a negative impact on the cannabis industry.

Analysts’ ratings

While Aphria’s consensus target price fell after its earnings, most analysts remain bullish on the stock. The overall “strong-buy” rating didn’t change from the period before the company’s earnings release.

Currently, among the 12 analysts covering the stock, three recommend a “strong-buy,” six recommend a “buy,” two recommend a “hold,” and one recommends a “sell.”

Meanwhile, most of the analysts have a “hold” rating on Cronos Group and a target price of 20.03 Canadian dollars. Canopy Growth has a “buy” rating on its stock and a target price of 54.5 Canadian dollars. Aurora Cannabis has a “hold” rating on its stock and a target price of 10.3 Canadian dollars.

Comparing Aphria with its peers

On the earnings call, Aphria’s management announced that the company has expansion plans for Cannabis 2.0. The company plans to expand into the vapes and concentrates segment. Aphria thinks that vapes and concentrates will consume 30% of the entire Canadian adult-use market by 2021. The company’s partnership with PAX Labs will allow it to have a broad portfolio of vapes and concentrate products. Aphria expects to generate strong revenue growth after the US CBD market is legal.

Canopy Growth and Aurora Cannabis are also preparing to expand. To learn more, read Cannabis 2.0: Aurora Cannabis Gears Up for Edibles Market. We’ll have to see how cannabis companies compete with their expansion plans.

In September, Aurora Cannabis and Aphria have lost 13.4% and 8.9%. Cronos Group has fallen 15.0%, while Canopy Growth has gained 1.8%. Aphria has gained 0.18% YTD (year-to-date), while Aurora Cannabis, Canopy Growth, and Cronos Group have lost 4.0%, 10.6%, and 9.0% YTD.

The Horizons Marijuana Life Sciences ETF (HMMJ) tracks the North American cannabis industry. HMMJ has lost 7.7% in September.

Aphria hasn’t announced the date for its earnings results for the first quarter of 2020. Investors want to see if Aphria continues to deliver strong results. To learn more, read Aphria versus Aurora Cannabis: A Valuation Update.

For more recent updates on marijuana legalization in the US and other countries, read Marijuana Legalization: South Dakota Does What Trump Said! and Marijuana Legalization: Mexico Will Seal the Deal!

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