Aphria's Q2 Cannabis Sales Exceed Cantor Fitzgerald's Expectations

Aphria Inc. APHA APHA reported a second-quarter net loss of CA$7.9 million ($6.1 million) or CA$0.03 per share versus Tuesday versus net income of CA$16.4 million, or CA$0.07 per share, in the first quarter.

The Aphria Analyst

Cantor Fitzgerald’s Pablo Zuanic maintained an Overweight rating on Aphria with a CA$9.90 ($7.58) price target.

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The Aphria Thesis

The company’s total sales of CA$120.6 million were lower than Cantor's estimate of CA$124.4 million and the consensus estimate of CA$130 million, while core cannabis sales beat by Cantor's estimate by CA$3 million and the German distribution unit missed by CA$8 million, Zuanic said in a Tuesday note. (See his track record here.) 

Aphria’s medical cannabis revenues were mostly stable, the analyst said, adding that bulk sales reached only CA$0.4 million versus compared to CA$4.9 million in the prior quarter. 

“The company says demand was ahead of its own supply so it had to buy in the wholesale market,” Zuanic said. 

Aphria posted improved cannabis EBITDA of CA$3.4 million, compared to the previous quarter's CA$1.3 million. Cantor had expected cannabis EBITDA of CA$3.2 million, and the consensus estimate was CA$1 million.

The company lowered its fiscal year 2020 sales guidance by CA$75 million to a range of CA$575 million to CA$625 million, and distribution by more than half. Zuanic said he considers this a combined cut in distribution and cannabis.

The lower cannabis guidance is due to the passive launch of new stores and vape bans in combination with later-than-projected licensing of Aphria Diamond, the analyst said. 

Aphria Price Action

Aphria shares were down 4.95% at $5.18 at the time of publication Tuesday. 

Photo courtesy of Aphria.