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Aphria gets price target raise at PI Financial

Canadian Stock News Cantech

AphriaWith a recent bought deal adding to an already impressive war chest, Aphria (Aphria Stock Quote, Chart, News: TSX:APH) is now the market leader in terms of funded capacity, says PI Financial analyst Jason Zandberg.

On February 24, Aphria announced that it had sold a total of 11.5-million shares at a price of $5.00 per share to raise $57.5-million. The company said the proceeds would be used to fund the expansion of its Part 4 expansion project and for strategic investments.

Zandberg says this latest round of financing puts Aphria over the top in a key metric.

“We believe Aphria is the MJ market leader in terms of funded capacity,” says the analyst. “Having recently closed a $57.5M bought deal financing, we estimate Aphria’s cash balance currently sits at around $130M – $160M. We estimate that Aphria’s total funded capacity is 61,000kg. This estimate includes current capacity of 2,800kg plus funded expansion plans – we have assumed Part 2 and 3 are funded and Part 4 expansion is partially funded. This funded capacity is the highest among the licensed producers in Canada.”

Zandberg says Aphria’s capacity after its Part 4 expansion will be impressive.

“After the Part 4 expansion is complete, Aphria will have a total greenhouse growing space of 1,000,000 sqft. and will be able to produce up to 70,000kg per annum implying yields of 70 grams/sqft above industry greenhouse average yields of 60 grams/sqft,” he says.

In a research update to clients today, Zandberg maintained his “Buy” rating, but raised his one-year price target on Aphria from $6.00 to $8.00. The analyst says the target raise is due to the increase in peer multiples and our EV/Funded Capacity valuation.

Zandberg believes Aphria will post EBITDA of $4.17-million on revenue of $20.2-million in fiscal 2017. He expects these numbers will improve to EBITDA of $14.9-million on a topline of $42.3-million the following year.

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About The Author /

Cantech Letter founder and editor Nick Waddell has lived in five Canadian provinces and is proud of his country's often overlooked contributions to the world of science and technology. Waddell takes a regular shift on the Canadian media circuit, making appearances on CTV, CBC and BNN, and contributing to publications such as Canadian Business and Business Insider.
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