Cantor: 'Aleafia Continues To Post Solid Momentum,' Firm Bullish But Lowers Price Target Due To Cannabis Sector Derating

Cantor Fitzgerald issued an analysis on Aleafia Health Inc. (TSX:AH) (OTCQX:ALEAF), after the company released its financial results earlier Thursday for the second quarter of this year, which revealed a 53% sequential increase in cannabis net revenue, totaling roughly $9.6 million in the second quarter of 2021.

Cantor remained Neutral but lowered its 12-month price target to C$0.42 from C$0.50 due to the sectoral derating. 

Net revenues in the second quarter grew 51% from the previous quarter. The firm reported that management pointed to sequential growth in 3Q and an “even better” 4Q results, as the company benefits from expanded outdoor growth with double the acreage and potentially better yields.

“Although small relative to our LP coverage, Aleafia continues to post solid momentum,” analyst Pablo Zuanic wrote.

“Patient counts grew following the partnership with Unifor, and we see room for further growth given present ~4% med share,” Zuanic continued.

New SKUs, brands and distribution gains are driving recreational growth, but the firm estimates recreational share at only 0.7%. 

“We remain Neutral, are encouraged by top-line trends and the optionality the outdoor crop should give the company, but need more comfort on profitability and cash flow,” Zuanic concluded.

Aleafia was trading 6.23% lower at $0.2907 per share, after closing on Thursday.

Lead image by Ilona Szetivanyi. Copyright: Benzinga.