Shares of Canadian cannabis company Aphria Inc. APHA,
APHA,
rose 4.4% in pre-trading on Tuesday, after Stifel raised its share price target to C $ 15.50 ($ 12.18) from C $ 9.80, saying recent results underline the company’s long-term outlook. But analysts led by W. Andrew Carter also reiterate a stock valuation. While Aphria’s earnings beat Stifel’s estimates, they include lower Canadian adult sales, tempered by stronger distribution sales and higher medical sales worldwide, analysts write in a note to clients. However, they said they were surprised by the better performance of the stock – it rose 25% to earnings, while the S&P 500 SPX,
fell by 1% – after earnings and an increase in strength after election. “We believe that the better performance for the Canadian long-playing records in terms of US federal reform has limited the merit of pushing valuations to unfounded levels, but we believe that our strong fundamental prospects, coupled with the growth prospects of the pending combination with Tilray Inc. TLRY,
are limiting factors for a negative approach, ‘the analysts wrote.’ But we believe that the robust valuation (11X EV / FY22E net cannabis revenue) is an obstacle to material performance with the stock likely to remain volatile. “Cantor Fitzgerald raised its 12-month share price target for Aphria to C $ 26 from C $ 11.75 on Friday to witness its merger with Tilray, although it was not impressed with the company’s quarterly earnings. Aphria shares have risen 136% over the past twelve months, while the Cannabis ETF THCX,
achieved 29%.
