APHA Jan 2020 5.000 call

OPR - OPR Delayed Price. Currency in USD
-0.0800 (-13.79%)
At close: 3:58PM EDT
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Previous Close0.9000
Expire Date2020-01-17
Day's Range0.5400 - 0.6000
Contract RangeN/A
Open Interest13.8k
  • E-Cigarette Ban in New York: Impact on Cannabis Sector
    Market Realist

    E-Cigarette Ban in New York: Impact on Cannabis Sector

    The vaping crisis has brought on some twists and turns for the cannabis sector. New York courts are now weighing an e-cigarette ban.

  • Pot stocks ‘significantly oversold’: ETF manager
    Yahoo Finance

    Pot stocks ‘significantly oversold’: ETF manager

    Legal pot could provide "significant upside" for investors, ETF manager says

  • Aurora Cannabis Plans to Launch Vapes despite Concerns
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    Aurora Cannabis Plans to Launch Vapes despite Concerns

    Despite vaping concerns, Aurora Cannabis plans to introduce vape products in December. Reports of vaping-related illnesses started in late August.

  • The Major Challenge These 3 Profitable Cannabis Stocks Face

    The Major Challenge These 3 Profitable Cannabis Stocks Face

    Aphria (APHA), Trulieve (TCNNF) and Organigram (OGI) have separated themselves from most of the cannabis pack, based upon managing to turn a profit.In the near term I believe these three companies should continue to do well, but in the longer term, they face challenges concerning profitability that some of their larger competitors decided to deal with in the early stages of growth.For that reason these companies are getting rewarded now, but that could change as the tide turns and they are forced to look for ways to grow both the top and bottom lines.In this article we'll look at what that challenge is and the potential impact on the long-term growth and potential profitability of the three companies.What the market is looking for nowWith the fear trade on in the broader market and investors starting to look for profits in the cannabis industry, those companies able to generate a profit at this time are being rewarded for their performance.I've mentioned for awhile now that the market was transitioning from a primary focus on growth and revenue to profits in the cannabis sector. That moment has obviously arrived from the way investors have been responding to those generating a profit, with the caveat of whether or not they'll be able to maintain that profit if they enter into serious expansion.But for the next three quarters or so, I see the market continuing to look for profits in the cannabis sector until questions start to arise concerning how the companies will grow their top lines.In other words, I see the market reversing direction, probably by the end of the first calendar 2020 quarter, and by latest, the second calendar quarter.The reason for that is because by that time, as far as Aphria and Organigram go, Canada will have at least a full quarter of two of derivative sales, which will give a clear picture as the potential upside for both the top and bottom lines.With sales likely to jump in Canada from derivative products and the increase in retail outlets, investors are going to want to see how the companies is going to grow revenue going forward.Trulieve (TCNNF)The challenge these companies face is they are positioning themselves as being able to generate a profit, when in reality the major reason for that is because of their more modest expansion goals in the near term.For example, Trulieve is the dominant player in Florida, but is now staring to look outside that market for growth. It will eventually be forced to spend a lot of money to gain market share in other markets, and they aren't likely to duplicate its performance in Florida because competitors already are taking a significant piece of the markets Trulieve will be competing in.Eventually this will put downward pressure on earnings, and the market will punish it under that scenario, unless it reports significant revenue growth at the time it starts to boost expenditures.OrganiGram (OGI) As for OrganiGram, the location of its base on the Atlantic coast has given it an edge on competitors for now, but after they are finished battling for market share in Quebec and Ontario, they will expand to the less populated parts of Canada. The company will face a lot more competition when that happens.Because of its unique growing process, OrganiGram is one of the market leaders in yield. According to the company, it produces about 230 grams per square foot, against the industry average of between 75 and 125 grams per square foot.With the goal of producing 113,000 kilograms annually, the upside potential of OrganiGram is limited, and I think it'll struggle to maintain market share once its larger competitors take aim at the primary market it competes in.Its yields are a competitive advantage now, but when its larger competitors, through much larger scale, cut back their price per gram as well, much of its current competitive advantage is going to evaporate.Aphria (APHA)Of these three companies, Aphria appears to have the best chance at sustainbly enjoying revenue and earnings growth over the long haul. Its production capacity will eventually climb to about 255,000 kilograms a year, which will only be behind a couple of its larger competitors.It also has a strong balance sheet of $464 million of cash and marketable securities, giving it a cushion in the current soft cannabis market.Looking ahead, it guides for revenue of C$650 million to C$700 million and adjusted Ebitda of C$88 million to C$95 million for fiscal 2020.As with the majority of its Canadian-based counterparts, it did miss on revenue in the latest quarter, although that is without a doubt the consequence of the slow rollout of retail outlets in Canada. That should vastly improve over the next several quarters.ConclusionIn the near term I think Aphria, Trulieve and Organigram should continue to do very well, as long as they continue to generate profits.Once investors start to look for future prospects for revenue growth, at that time I think these companies could start to receive downward pressure if they haven't shown the market how they're going to grow over the long term.Of these three, I think Organigram is the most susceptible to weakness, followed by Trulieve, because of its primary exposure to Florida, and the need to spend a lot more to keep up with fast-growing MSOs, who as with their larger Canadian peers, are taking their hits now rather than later.Aphria in my view has the best chance of these three to generate probable long-term sustainable growth on the top and bottom lines. I'm not convinced it'll be able to keep up with its larger competitors as they grow while slashing costs, but it has the potential to at least keep near the top in the Canadian market. How it competes internationally in the years ahead will probably dictate its ultimate success.For now though, all three of these companies should enjoy strength in their share prices as long as the market favors profitability over growth. Once that changes, they will face challenging times because of how larger competitors are boosting sales while turning a profit.To find good ideas for cannabis stocks trading at fair value or better, visit TipRanks’ Best Stocks to Buy, a newly launched feature that unites all of TipRanks’ equity insights.

  • Why Cronos Rose 33% in After-Hours Trading on Wednesday
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    Why Cronos Rose 33% in After-Hours Trading on Wednesday

    Cronos Group (CRON) stock rose 33% with a heavy volume in after-hours trading on Wednesday. Marijuana stocks are on a rollercoaster ride.

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  • Aurora Cannabis: Preview of Its Cannabis 2.0 Strategy
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    Aurora Cannabis: Preview of Its Cannabis 2.0 Strategy

    On Wednesday, Aurora Cannabis gave a preview of its Cannabis 2.0 strategy. The company provided plans for the roll-out of edibles, concentrates, and vapes.

  • MarketWatch

    Cannabis sector falls as Aphria surrenders gains, Aurora tipped to be long-term winner

    Aphria Inc. stock fell 8% Wednesday to pace decliners in the cannabis sector, a day after it reported earnings for its fiscal first quarter that showed a profit that was mostly due to a change in its stock price and shift in its stake in another company.

  • Cannabis Legalization: Will New Mexico Be Next?
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    Cannabis Legalization: Will New Mexico Be Next?

    In 2007, New Mexico was the 12th state to legalize medical cannabis in the US. However, the state hasn't legalized marijuana for recreational use.

  • Aphria: Analysts’ Target Price and Ratings after Earnings
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    Aphria: Analysts’ Target Price and Ratings after Earnings

    Aphria (APHA) reported impressive results for the first quarter of fiscal 2020 on Tuesday. The stock has gained 9.6% since its earnings.

  • Benzinga

    One Year Later: How Every Major Cannabis Stock Has Performed Since Canadian Legalization

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  • High Tide Announces Opening of 2nd KushBar Location Bringing its Total to 26 Branded Retail Cannabis Stores across Canada
    CNW Group

    High Tide Announces Opening of 2nd KushBar Location Bringing its Total to 26 Branded Retail Cannabis Stores across Canada

    CALGARY , Oct. 17, 2019 /CNW/ - High Tide Inc. ("High Tide" or the "Company") (HITI.CN) (HITIF) (2LY.F), an Alberta -based, retail-focused cannabis corporation enhanced by the manufacturing and wholesale distribution of smoking accessories and cannabis lifestyle products, today announced that the KushBar retail store located in Unit #7 at 8807 100th Street in Morinville (the "KushBar Store") received its first delivery of cannabis products from Alberta Gaming, Liquor and Cannabis ("AGLC") and today will begin selling recreational cannabis products and accessories. To celebrate the grand opening of this location, festivities will take place at the KushBar Store on Saturday, October 19th .

  • Cannabis Roundup: HEXO, APHA, CRLBF, and CRON
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    Cannabis Roundup: HEXO, APHA, CRLBF, and CRON

    Hexo launched Original Stash, a value cannabis brand. Hexo's CEO stated that the company intends to educate consumers and "disrupt the illicit market."

  • Aphria’s Q1 Earnings Call: Key Takeaways
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    Aphria’s Q1 Earnings Call: Key Takeaways

    On October 15, Aphria (APHA) reported its earnings results for the first quarter of fiscal 2020, which ended on August 31.

  • 3 Cannabis Stocks Hit By Seaport Global Reset

    3 Cannabis Stocks Hit By Seaport Global Reset

    As the Canadian cannabis market undergoes growing pains, the industry stocks have taken a beating. The majority of the stocks in the sector are down over 50% as industry demand remains weak due to a lack of retail stores and a mounting flood of supply pressuring prices.Seaport Global analyst Brett Hundley recently reset expectations for the cannabis sector. Hundley is generally neutral on all of the Canadian stocks due to expectations of substantial revenue cuts with a more bullish view of the U.S. multi-state operator market.A major sign of his bearish view was the maintaining of a Buy rating on Aphria while lowering the price target from $13 to only $8. All of the other stocks in his coverage have Neutral ratings including updated numbers on Aurora Cannabis and HEXO after the later company recently slashed estimates and pulled guidance for FY20.We’ve delved into these three cannabis companies poised to struggle from low demand in Canada primarily due to a lack of retail stores all the way into 2021:Aurora Cannabis (ACB) Hundley makes big hits to the expectations for Aurora Cannabis in FY20 and FY21. The major basis for holding these large cannabis stocks was a concept of revenues reaching C$1 billion in the next year or so, but the analyst no longer thinks that is the case.In fact, Hundley is now far below consensus. The analyst reduced FY20 revenue estimates from C$589 million to only C$391 million. The new FY21 target was slashed by more than 50% with revenues dipping from C$992 million to only C$410 million. The forecast is that revenues only grow 5% during FY21.The resulting impact is that Aurora Cannabis doesn’t even reach profitability in FY21 despite the original guidance from the company of reaching that target in FQ4’19. Hundley now has the company producing an adjusted EBITDA loss of C$35 million in FY21.The stock still has a market valuation approaching $4 billion which is relatively expensive for a company with revenue estimates from Hundley of only $311 million in an out year. Stocks don’t usually maintain +10x sales valuations while losing money in a slow growth environment. Based on these estimates, Aurora Cannabis should have a Sell rating.TipRanks indicates Wall Street is evenly split between the bulls and the fence sitters on this cannabis stock. Out of 15 analysts polled in the last 3 months, 6 are bullish on Aurora stock, 6 remain sidelined, while 3 are bearish on the stock. Yet, consider that the 12-month average price target of $6.83 reflects healthy upside potential of nearly 90% from where the stock is currently trading; in other words, optimism circulates among analyst sentiment even amid apprehension. (See Aurora stock analysis on TipRanks)HEXO Corp. (HEXO)HEXO was a clear-cut case for estimate reductions after the company slashed last quarter estimates and pulled full year guidance. Hundley slashed revenue estimates for the next couple of years to factor in near zero growth.The analyst has HEXO only generating FY21 revenues of C$122 million, down from previous estimates of C$613 million. The company is now forecast to have breakeven adjusted EBITDA next fiscal year.The lack of guidance from HEXO and the quick departure of the CFO leave the numbers near impossible to model. Based on a market valuation of $660 million, the stock is far too expensive for the numbers outlined by Hundley.My expectations would be for the company to exceed these lowered estimates, but the stock isn’t touchable until more confidence exists in the ability of HEXO to operate in the current competitive market in Canada.The company needs to double or triple these revenue estimates from Hundley to make the stock a buy here. Investors have no reason to touch the stock here.Wall Street believes Hundley is smart to play it safe when it comes to the HEXO's prospects ahead, as TipRanks analytics reveal the stock as a Hold. Out of 10 analysts polled in the last 3 months, 7 remain cautious on HEXO stock, 2 are bullish, and one is bearish on the stock. However, the $4.46 price target suggests a potential of over 80% from the current share price. Most likely a result of the sudden tumble and analysts’ inability to turnaround new price targets so quickly. (See HEXO stock analysis on TipRanks)Aphria (APHA)Hundley was most bullish on Aphria in the Canadian cannabis sector despite a massive cut to the price target. The analyst had actually modeled revenues to C$131 million in the FQ1 just reported and the company didn’t even reach this target reporting C$126 million.A lot of the revenue miss came from a switch in the German operations to improve profitability, so the overall analyst estimates weren’t cut in an update. The other estimates by analyst Brett Hundley appear far too bearish as acknowledged by the analyst, yet the one comparison already in the market was too high.The new number already had Aphria seeing FY21 revenues dip to C$593 million, down from C$973 million. The analysts now has revenues estimates for FY21 at C$596 million so he has slightly more confidence in Aphria after the FQ1’20 report.Possibly most interesting was the company maintaining FY20 revenue guidance of at least C$650 million while Hundley reduced targets to only C$546 million. A wide gap now exists between where the analyst maintained estimates and the updated guidance from the company.The biggest positive for Aphria is the expectation of generating positive EBITDA as liquidity could become a major problem in the sector. The ability to generate cash from operations and over C$400 million on the balance sheet will help Aphria survive any further market pressure.The stock soared on the basis of maintaining revenue estimates for the year while Seaport is predicting limited growth despite the company having over 5 months of Cannabis 2.0 to contribute to the FY20 results. Aphria is only trading up to $5.50 on the market perception of positive results so Hundley still sees plenty of upside on the stock.If we step back and look at the bigger picture, we can see that overall the stock has a ‘Moderate Buy’ analyst consensus rating. In the last three months, the stock has received 5 "buy" ratings and just one "hold" and one "Sell" ratings. With an average analyst price target of $8.20, analysts are projecting upside potential of 64% from the current share price. (See Aphria stock analysis on TipRanks)

  • Marijuana: Pennsylvania Introduces Legalization Bill
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    Marijuana: Pennsylvania Introduces Legalization Bill

    Two Pennsylvania senators introduced a comprehensive marijuana legalization bill on Tuesday. Senator Daylin Leach and Sharif Street introduced the bill.

  • Aphria: Valuation Update after Its Q1 Earnings
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    Aphria: Valuation Update after Its Q1 Earnings

    On Tuesday, Aphria (APHA) reported its earnings for the first quarter of fiscal 2020. The company’s revenues missed analysts’ expectations.

  • Cannabis Edibles: October 17 Is Almost Here!
    Market Realist

    Cannabis Edibles: October 17 Is Almost Here!

    Cannabis edibles legalization is almost here! On Thursday, Canada will finally legalize edibles, infused beverages, and extracts.

  • Aphria profit didn’t come from selling marijuana

    Aphria profit didn’t come from selling marijuana

    Aphria Inc.’s profits are about the paper, not the pot. The Canadian cannabis producer reported its second consecutive quarter of profitability early Tuesday, posting net income of C$16.4 million on sales of C$126.1 million. U.S.-traded shares of Aphria (APHA)(CA:APHA) closed Tuesday’s regular session with a 24% gain, but had previously fallen just over 6% in the quarter it reported Tuesday.

  • Market Exclusive

    Market Morning: Brexit Back’n’Forth, Carrie Lam Booed Off Stage, Buffett Wants BofA, Balkman Blunders

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  • Aphria (APHA) Stock Lifted by a Relief Rally

    Aphria (APHA) Stock Lifted by a Relief Rally

    With cannabis stocks beaten down in the last few months, the big rally by Aphria (APHA) following the release of FQ1 numbers is a major relief rally. The numbers weren’t exactly spectacular for a cannabis sector expected to generate substantial revenue growth, yet the stock didn’t deserve the 35% decline since the September peak above $7.Flat To Down QuarterThe quarterly numbers just weren’t that impressive. Aphria reported revenues down 2% from the prior quarter as a change in business strategy in Germany caused a reduction in sales.In total, FQ1 net sales of C$126.1 million were down from C$128.6 million in the prior quarter. The key adjusted EBITDA figure was C$1.0 million, up from C$0.2 million in the prior quarter. The adjusted EBITDA from the important cannabis operations was actually down about C$0.5 million from C$1.8 million in the prior quarter.Due to the purchase of the cannabis distribution system in Germany, the company has a confusing set of financials. CC Pharma generates most of the revenues while the Canadian cannabis operations generates all of the positive EBITDA and most of the gross profits.Reaffirming GuidanceAfter the debacle at HEXO, the market was relieved to see Aphria maintain full year guidance. The company forecasts net revenues of C$650 million to C$700 million with distribution revenue representing slightly above half of total net revenue. The cannabis company maintained adjusted EBITDA of ~C$88 million to C$95 million.The key to FY20 guidance is the expectation to drastically expanded cannabis operations revenues. One might question if that actually can occur with how weak Canadian sales have been over the Summer. Aphria needs to boost the cannabis operations sales from C$30 million in FQ1 to end the year closer to C$100 million on a quarterly basis.In FQ1, Aphria only sold 5,969 kg of cannabis, up about 10% from the prior quarter. The company remains on track to up production to 255,000 kg when all facilities are fully licensed and operational.The goal is to increase quarterly capacity 10-fold to 63,750 kg. No doubt, this amount of capacity growth will generate revenue growth for the division with about 50% margin already, but the question remains how Canada will absorb all of this additional capacity.In the quarter, Aphria saw average retail selling prices of both medical and recreational cannabis remain relatively stable. In fact, the company saw recreational prices increase to C$6.02 (before excise taxes) sequentially while just about every other cannabis player in Canada has seen pricing pressure. Major pricing pressure in the December quarter could reduce any benefit of higher production output.Consensus Verdict The rest of Wall Street largely buys into what this cannabis player has to offer, as TipRanks analytics reveal APHA as a Buy. Out of 5 analysts polled in the last 3 months, 3 are bullish on Aphria stock while one remains neutral and one is bearish. With a return potential of 47%, the stock’s consensus target price stands at $7.95. (See Aphria stock analysis on TipRanks)One of these analysts, Jefferies' Owen Bennett, reiterated a "buy" rating on APHA stock today, along with C$11.00 price target. Bennett noted, "We highlight Aphria as one of our three top picks, with strong execution, profitability, and possible near-term positive newsflow around the US all helping. Today's update supports our bullishness. On execution, it continues to take market share in Canada and also reiterated its sales and EBITDA outlook. The confirmation of sales should be seen as a big positive given that there have been concerns around wider industry pressures, with a wave of recent street downgrades [...] We continue to believe Aphria can be one of a few global leaders long term, yet it remains one of the cheapest names across our coverage and at a significant discount to the likes of Canopy, Tilray, Aurora and Cronos." (To watch Bennett's track record, click here)TakeawayThe key investor takeaway is that Aphria has now proven to the market that the management and operational concerns are in the past. The company continues to produce solid numbers in a competitive cannabis market.With about 252 million shares outstanding, the stock has a current market cap of ~$1.35 billion. After converting the adjusted EBITDA target to ~$70 million in US dollars, the stock trades at about 20x the forecast. Aphria is reasonably valued after the rally, though the company has a long ways to go in order to prove all of this cannabis production increase can be turned into positive numbers.To find more good ideas for cannabis stocks trading at fair value or better, Visit TipRanks’ Best Stocks to Buy, a newly launched feature that unites all of TipRanks’ equity insights.

  • Aphria Soars On First-Quarter Earnings; Marijuana Stocks Rally
    Investor's Business Daily

    Aphria Soars On First-Quarter Earnings; Marijuana Stocks Rally

    Canadian cannabis producer Aphria reported a fiscal Q1 profit and a big jump in revenue. Aphria stock soared. Other beaten-down marijuana stocks rose.

  • Cannabis stocks ‘significantly oversold’: ETF manager
    Yahoo Finance Video

    Cannabis stocks ‘significantly oversold’: ETF manager

    Noah Hamman, CEO of AdvisorShares, tells Yahoo Finance's Alexis Christoforous and Brian Sozzi why he's still bullish on cannabis stocks.

  • Hexo to sell ‘Original Stash’ at black market prices
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    Hexo to sell ‘Original Stash’ at black market prices

    Canadian cannabis company Hexo is launching an “Original Stash” cannabis line with prices that compete directly with the black market in an effort to hurt the black market. Yahoo Finance's Dan Roberts, Heidi Chung and Kristin Myers discuss on YFi AM.