TORONTO – Canadian Aphria (APHA) a leading cannabis company had its target price increased by the influential Cantor Fitzgerald. Cantor raised their target price of to C$26 from C$11.75 on Friday, to factor in its merger with Tilray Inc. TLRY, +6.14% despite the company’s quarterly earnings released last week.
“We were disappointed by the November quarter reported by APHA, but that would be like saying that President-elect Biden, VP-elect Harris, and just-elected Senators Warnock and Ossoff, all had a bad hair day,” analyst Pablo Zuanic wrote in a note to clients.
“They just won their respective elections. We think the analogy applies here – it is about what APHA + TLRY can do in a fast-deregulating cannabis world.” Zuanic is expecting Canadian licensed players to hit the ground running when overseas markets open further including Mexico, Germany and the U.K., as medical markets develop worldwide and as Aphria can now enter the U.S.
“We raise these points because if Canopy Growth CGC, -3.55% WEED, +0.73% and Cronos CRON, -2.93% CRON, +2.15% are valued at 18-21x CY21 EV/sales (based on FactSet consensus estimates), and APHA + TLRY is at 13x, despite being #1 in the Canadian market (20% share, 7pt above #2), and having the optionality of a future CPG partner (we think it is the most attractive asset), we would say there is value,” wrote.
Aphria shares were up 7.5% premarket Friday, and have gained 131% in the last 12 months, while the Cannabis ETF THCX, -0.50% has gained 31% and the S&P 500 SPX, -0.72% has gained 15%.