Aphria Stock, Marijuana Stocks Rally On Sales Beat, But Analyst Cites These Concerns

Aphria stock and other marijuana stocks jumped on Thursday, after the Canadian cannabis producer reported fiscal second-quarter revenue that beat expectations.X{“@context”:”https:\/\/schema.org”,”@type”:”VideoObject”,”name”:”David Ryan’s Market Outlook For 2021″,”description”:”In the first week of 2021, William J. O’Neil protege David Ryan provided his 2021 market outlook on IBD Live. Ryan discussed the market factors in play leading him to be positive at this time, as well as the areas of the market he’s paying close attention.”,”thumbnailUrl”:”https:\/\/www.investors.com\/wp-content\/uploads\/2021\/01\/SoRwN2jw-640×360.jpg”,”contentUrl”:”https:\/\/content.jwplatform.com\/manifests\/SoRwN2jw.m3u8″,”uploadDate”:”2021-01-12T14:59:39+0000″,”duration”:”PT291.23S”,”author”:”IBD VIDEOS”,”publisher”:{“@type”:”Organization”,”name”:”Investor’s Business Daily”,”logo”:{“@type”:”ImageObject”,”url”:”https:\/\/www.investors.com\/wp-content\/uploads\/2020\/06\/ibd-logo.png”},”url”:”https:\/\/www.investors.com”},”keywords”:””}The pot grower reported the results after it agreed to merge with rival Tilray (TLRY) — potentially creating a global weed-industry giant — and as more focus shifts to the U.S. and its legalization prospects. But at least one analyst expressed concern about a deceleration in Aphria’s cannabis sales.Aphria (APHA) reported net sales of 160.5 million Canadian dollars, or around $126.57 million. That’s up 10% from the prior quarter, and above Zacks forecasts for $119.39 million.Most of that revenue — 91.74 million Canadian dollars — came from CC Pharma, a German pharmaceutical and medical pot distributor Aphria bought in 2019. Around 67.9 million came from cannabis, up 7%. However, that’s slower than the 18% gain put up in the prior quarter.Five days’ worth of alcohol sales from U.S. craft brewer SweetWater, which Aphria agreed to buy in November, also added 881,000 Canadian dollars in net sales.On an adjusted basis, Aphria earned 1 Canadian cent per share, or a little less than 1 cent in the U.S. Factoring out those adjustments, it lost 42 Canadian cents per share. Zacks expected a per-share loss of 2 cents in U.S. currency.”While the headlines are positive, we believe the slowing growth from the Canadian adult use business is a concern with the outsize contribution from global medical sales (C$5.3 million) likely aiding profitability,” Stifel analyst Andrew Carter said in a research note.IBD Live: A New Tool For Daily Stock Market AnalysisAphria Stock, Marijuana StocksNonetheless, Aphria stock jumped 21% to close at 12.11 on the stock market today, hitting the highest level since November 2018. The stock has an 81 Composite Rating. But its EPS Rating is a weak 6. Tilray stock surged 23.6%. That stock’s Composite and EPS ratings are 67 and 23.Among other marijuana stocks, Canopy Growth (CGC) rose 7.6%. Cronos Group (CRON) added 5.2%. Aurora Cannabis (ACB) gained 9.6%.When Aphria and Tilray agreed to merge last month, the companies said the deal would create a large, international company with $685 million in annual revenue and offices in the U.S., Canada, Portugal and Germany.But Aphria would be taking on a company that’s still trying to work off debt. Analysts have questioned whether Aphria’s U.S. business, SweetWater, and Tilray’s U.S. CBD operations — Manitoba Harvest, which makes hemp foods like granola and some CBD products — are best positioned for broader U.S. legalization.Marijuana stocks have rallied since the U.S. election in November, on greater expectations that a Democratic president and Senate would more quickly pass laws to make it easier for cannabis companies to operate.But any Canadian company trying to operate in the U.S. would need to build out infrastructure and obtain licenses. And they would be competing with large cannabis companies operating in multiple U.S. states.YOU MAY ALSO LIKE:Marijuana Stocks To Buy And WatchCGC Stock A Buy? The Biggest Marijuana Stock Soars On Georgia ResultsIs TLRY Stock A Buy After Georgia Senate Runoffs?Stocks To Watch: Which Companies Are Now Outperforming 95% Of All Stocks?Join IBD Live And Learn Top Chart Reading And Trading Techniques From ProsThe post Aphria Stock, Marijuana Stocks Rally On Sales Beat, But Analyst Cites These Concerns appeared first on Investor’s Business Daily.
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