fbpx

QQQ
+ 2.31
364.32
+ 0.63%
BTC/USD
+ 837.18
62365.51
+ 1.36%
DIA
+ 3.70
345.43
+ 1.06%
SPY
+ 3.26
439.24
+ 0.74%
TLT
-0.85
146.73
-0.58%
GLD
-2.66
170.66
-1.58%

Aphria, Aurora Analyst Says Buy The Dip To Take Advantage Of Cannabis Stock Sell-Off

June 1, 2020 12:21 pm
Share to Linkedin Share to Twitter Share to Facebook Share to Print License More
Aphria, Aurora Analyst Says Buy The Dip To Take Advantage Of Cannabis Stock Sell-Off

Canadian cannabis stocks tumbled Friday after Canopy Growth Corp (NYSE:CGC) reported a significant miss for its March quarter sales and withdrew its outlook for reaching positive EBITDA. Canopy also expressed concern over the company’s June quarter prospects.

The problems witnessed by Canopy Growth in the March quarter seem to be company-specific, and the broader sell-off among the group makes Aphria Inc (NYSE:APHA) and Aurora Cannabis Inc (NYSE:ACB) even more attractive, according to Cantor Fitzgerald.

The Aphria, Aurora Analyst

Pablo Zuanic maintained Overweight ratings on both Aphria and Aurora Cannabis, with price targets of CA$9.55 ($6.97) and CA$27.00 ($19.71), respectively.

The Cannabis Market Thesis

While Canopy Growth reported a 28% sequential decline in recreational sales before provisions, the industry witnessed 18% growth in the March quarter, Zuanic said in the note. (See his track record here.) 

Although June could be challenging for the industry, other companies will likely perform much better than Canopy Growth, the analyst said. U.S. data indicated robust demand during the pandemic, he said. 

Friday’s sell-off increases the attractiveness of Aphria and Aurora Cannabis, as both companies are performing better than Canopy Growth in key metrics like scale, sales growth, average pricing and Cannabis 2.0 products; they have better profit margin trajectories; and their stocks currently trade at “hefty discounts,” Zuanic said. 

APHA, ACB Price Action

Shares of Aurora Cannabis were down 1.28% at $13.90 at the time of publication Monday, while Aphria’s stock was up 4.14% at $4.40. 

Related Links: 

The Week In Cannabis: A Mixed Bag Leads Marijuana Stocks To Underperform

Cantor Fitzgerald Says Aurora Cannabis Sell-Off Creates Entry Point

Photo courtesy of Aurora Cannabis. 

For the latest in financial news, exclusive stories, memes follow Benzinga on Twitter, Facebook & Instagram. For the best interviews, stock market talk & videos, subscribe to Benzinga Podcasts and our YouTube channel.


Related Articles

Is Aurora Cannabis' 'Business Transformation Plan' Yielding Results?

Is Aurora Cannabis' 'Business Transformation Plan' Yielding Results?

Aurora Cannabis (NASDAQ: ACB) (TSX: ACB) reported a 45% year-over-year plunge in consumer cannabis net revenue, while its total net revenue in the fourth quarte read more
Will Aurora Become A Global Medical Marijuana Leader? Analyst Opines Ahead Of Q4 Earnings

Will Aurora Become A Global Medical Marijuana Leader? Analyst Opines Ahead Of Q4 Earnings

Canadian cannabis giant Aurora Cannabis Inc. (NYSE: ACB) (TSX: ACB) reported a plunge in third-quarter sales months ago, in addition to a negative adjusted EBITDA of CA$24 million ($28.3 million). read more
Organigram On Pace To Beat Tilray And Hexo In QoQ Sales Growth As Canadian Rec. Sales Reach $275.6M

Organigram On Pace To Beat Tilray And Hexo In QoQ Sales Growth As Canadian Rec. Sales Reach $275.6M

As COVID-related restrictions begin to ease across the globe, some industries are feeling the benefits more than others. When it comes to Canadian recreational cannabis sales, new Hifyre scanner data reveals a 10% improvement sequentially, noted Cantor Fitzgerald’s Pablo Zuanic in his latest industry report. read more
Tilray, Aurora, Sundial, Hexo Q2 Market And Sales Trends, Cantor Fitzgerald Projects Stronger Q3

Tilray, Aurora, Sundial, Hexo Q2 Market And Sales Trends, Cantor Fitzgerald Projects Stronger Q3

As COVID-19 safety measures begin to slowly lift and more people are getting vaccinated, many industries are beginning to blossom. For the cannabis industry, in particular, this could mean an improved third quarter (compared to the second quarter) as restrictions began to ease in June, according to Cantor Fitzgerald’s Pablo Zuanic. read more