Aphria still has upside, says Mackie Research

It possesses one of the most impressive charts of any stock over the past year, but Mackie Research Capital analyst Neil Gilmer thinks there is still a little upside in Aphria (Aphria Stock Quote, Chart, News: TSX:APH).

On October 7. Aphria will report its Q1, 2017 results. Gilmer says he expects “significant” growth. He notes that the company recently was granted an amendment to its license that will allow it to sell up to 3,600 kg of dried cannabis and sell up to 2,800 kg over the next year. The analyst believes this supports his belief that this quarter will be strong.

“We expect a solid quarter from Aphria next week,” says Gilmer. “We will also be looking at key metrics that we monitor on cost of goods sold per gram, both on a cash basis and all-in basis. In the company’s previous quarter it reported an all in cost per gram of $2.07 and cash cost of $1.15. We will look for modest improvement in those metrics in this quarter and management’s outlook on where they will trend towards in the upcoming quarters. The share price of Aphria has increased 134% since our launch in mid-April of this year as investor interest in cannabis stocks has been strong over the past 3 months. With positive industry fundamentals and Aphria’s operational execution, we believe next week’s earnings release will support our positive outlook on the company. ”

In a research update to clients today, Gilmer maintained his “Speculative Buy” rating and one-year price target of $3.75 on Aphria, implying a return of 8 per cent at the time of publication.

Gilmer thinks Aphria will post EBITDA of $900,000 on revenue of $4.2-million in the quarter. He expects the company’s fiscal 2017 EBITDA will come in at $5.5-million on revenue of $21-million.