Shares of Canadian cannabis company Aphria Inc. APHA, +2.56% APHA, +3.79% rose 4.4% in premarket trade Tuesday, after Stifel raised its stock price target to C$15.50 ($12.18) from C$9.80, and said recent results underscore the company’s long-term prospects. But analysts led by W. Andrew Carter also reiterated a hold rating on the stock. While Aphria’s earnings beat Stifel’s estimates, they included lower Canadian adult use sales, which were tempered by stronger distribution sales and higher global medical sales, the analysts wrote in a note to clients. Still, they said they were However, we have been surprised at the stock’s outperformance — it has gained 25% after earnings, while the S&P 500 SPX, -0.72% has fallen 1% — following earnings and adding to postelection strength. “We believe the outperformance for the Canadian LPs on the prospect of U.S.
federal reform has limited merit pushing valuations to unsubstantiated levels, but we believe our robust fundamental outlook alongside the growth prospects of the pending combination with Tilray TLRY, +6.14% are limiting factors for a more negative approach,” the analysts wrote. “. But we believe the robust valuation (11X EV/FY22E net cannabis revenue) serves as an impediment for material outperformance with the stock likely to remain volatile.” Aphria shares have gained 136% in the last 12 months, while the Cannabis ETF THCX, -0.50% has gained 29%.
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