Aphria (NASDAQ: APHA) has recently become a favorite marijuana stock due to better-than-expected quarterly results and impending merger with peers Tilray (NASDAQ: TLRY). On Tuesday, a leading analyst added to this positive sentiment a significant increase in the target price.
That analyst, W. Andrew Carter of Stifel, raised its price to 15.50 Canadian dollars ($ 12.14), above the previous C $ 9.80 ($ 7.67). In doing so, however, he maintained his neutral rating on stocks.
The prognosticator believes the second quarter results “underscore Aphria’s position of strength”, despite a decline in sales to the company’s main Canadian recreational marijuana segment. Stifel is maintaining its stock retention rating because the subsequent price appreciation (also based on prospects for the US to decriminalize marijuana at the federal level) limits the stock’s potential for superior performance.
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Vice President-elect Kamala Harris has promised that her government will take this step, although it probably has higher priorities, such as the national response to the coronavirus pandemic and the reversal of certain policies enacted by the Trump administration.
Regardless of when or if the U.S. changes control of marijuana, Aphria is gearing up to be a major marijuana company in North America. In addition to its link with Tilray (which is effectively an acquisition, although the combined companies adopt the name Tilray), Aphria is increasing with other assets. In November, it announced that it would buy SweetWater Brewing, a cannabis-flavored beer maker, for about $ 300 million.
Investors were clearly encouraged by the increase in Carter’s target price. They increased Aphria’s offer by almost 10% on Tuesday, despite the analyst’s insistence on maintaining the retention recommendation. In contrast, the S&P 500 increased by less than 1% on the day.