Actions of Aphria (NASDAQ: APHA) rose 8.8% on Monday, following an upgrade by analysts of the marijuana stock.
Stifel analyst W. Andrew Carter raised his rating on Aphria stocks to buy pending and placed a target price of $ 5.90 on his stocks. His new price forecast represents potential gains for investors of 26%, based on the current price of Aphria of $ 4.68.
Carter argues that Aphria should trade at higher valuation than its peers such as Aurora Cannabis (NYSE: ACB), due to its superior balance sheet and profitability parameters.
The analyst says that Aphria’s upcoming fourth quarter results will show that its sales doubled in fiscal 2020, which ended May 31, to reach $ 390 million. For the 2021 and 2022 fiscal years, he expects the pot growers’ sales to increase by 21% and 29% respectively, to reach $ 470 million and $ 610 million, partly due to the opening of new stores. retail in Canada. Carter predicts Aphria will generate positive cash flow in 2021 and up to $ 100 million in operating cash flow by 2022.
In turn, he predicts that investors will eventually price Aphria at a price higher than its less successful rivals. “We believe that fundamental performance will lead to a revaluation of stocks,” he said.