Cantor Fitzgerald raised its 12-month stock price target for Canadian cannabis company Aphria Inc. APHA, +21.10% APHA, +20.08% to C$26 from C$11.75 on Friday, to factor in its merger with Tilray Inc. TLRY, +23.57% even though it was unimpressed by the company’s quarterly earnings released on Thursday. “We were disappointed by the Nov qtr reported by APHA.TO on 1/14 (yes, the stock was up 20%, but we think other reasons were at play), 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 have a first-mover advantage as recreational markets open in overseas markets, such as Israel, Mexico, Germany and the Netherlands, as medical markets develop and as they enter the U.S. “We raise these points because if Canopy Growth CGC, +7.58% WEED, +7.13% and Cronos [s:cron][ CRON, +4.71% 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,” he wrote. Aphria shares were up 7.5% premarket Friday, and have gained 131% in the last 12 months, while the Cannabis ETF THCX, +7.90% has gained 31% and the S&P 500 SPX, -0.38% has gained 15%.
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