Cannabis Watch: Aphria rukt op prognoses als gevolg van coronavirus na een sterke stijging van de cannabisverkoo


Translating…


De Beste Kwaliteit CBD Olie?

MHBioShop CBD Olie Specialist  


Pour la meilleure qualité d’Huile de CBD Visitez

HuileCBD.be specialiste Huile de CBD


   

Cannabis Watch

Jefferies analyst says Aphria’s COVID-19 measures should not detract from ‘stellar operational quarter’

A previous version of this report misstated Aphria’s average cost for growing marijuana. The article has been corrected.

Aphria bought C$30 million worth of weed because of production delays at one of its facilities.

Aphria

Aphria Inc. told investors Wednesday that cannabis sales jumped 65% in its most recent quarter, but pull-backs from wholesale buyers across Canada due to COVID-19 forced the company to rescind guidance for the full year.

U.S.-traded shares of Aphria APHA, -5.30% rose 3.8% in afternoon trading.

Aphria Chief Financial Officer Carl Merton yanked the company’s full-year guidance of C$575 million ($413.5 million) to C$625 million, telling investors in a conference call early Wednesday that executive were unable to “accurately forecast the company’s year-end results” due to the COVID-19 pandemic. Aphria’s fiscal year ends in May and the company had already slashed its guidance when it reported second-quarter earnings.

Several provinces such as Ontario, Alberta and British Columbia were closed to deliveries for a week at the end of March to perform year-end inventory counts, he said, and several have scaled back purchasing overall. Ontario, the country’s most populous province, cancelled two weeks of cannabis purchases due to COVID-19. Alberta is ordering 40% less pot and in British Columbia, stores are closing voluntarily as they convert to curbside pickup, Merton said.

Quebec is proving a bright spot thus far, with sales at bricks-and-mortar stores up 40% and e-commerce sales ballooning 200% since the pandemic-related restrictions went into effect, Merton said.

Read:Aurora Cannabis will roll up its shares in a reverse stock split — here’s what you need to know

The CFO said the company has halted new significant capital expenditures and slashed its marketing budget by C$4 million in the fourth quarter. Merton said the company has sufficient funds for the next 12 months, a cash balance of C$515 million and no debt maturities for the next year.

In a conference call Wednesday morning, Chief Executive Irwin Simon said Aphria had made several changes due to COVID-19, including staggering work schedules, increasing sanitation measures and re-designing work facilities to ensure social distancing. The company has not laid off any staff.

See also:As cannabis industry stays largely quiet on coronavirus, this CEO has been sounding the alarm

Despite rescinding the company’s guidance due to COVID-19, Jefferies analyst Owen Bennett wrote in a Wednesday note that investors should not detract from “what is another stellar operational quarter.”

While the company’s first quarter revenue rose to C$144.4 million ($102.8 million) from C$73.58 million, C$88.3 million of the company’s sales resulted from its acquired low-margin European drug distribution business, CC Pharma.

Aphria’s cannabis sales net of excise taxes rose 65% to C$55.6 million. Recreational cannabis sales accounted for C$44.7 million of its total pot revenue. Because of production delays at one of its facilities, Aphria bought C$30 million worth of weed from the spot market through the second and third quarter, half of which it had sold by the quarter’s end for C$20 million. CFO Merton estimated Aphria’s gross profit would have been C$7.6 million greater if it had grown the pot itself.

Don’t miss:Pot shops are considered ‘essential’ businesses in most states where it’s legal, but the rules are shifting

The company reported late Tuesday that the company had swung to net income of C$4.96 million ($3.53 million), or 2 cents a share, from a loss of C$108.27 million, or 43 cents a share, in the year-ago period. That beat the FactSet consensus for a loss per share of 4 cents. Aphria’s weed got cheaper to grow, dropping to all-in costs of C$1.69 per gram from C$1.98 in the prior quarter.

Bennett wrote in the Wednesday note that Aphria is one of the few companies “posting positive sales and earnings momentum, while also having a strong liquidity position going into a period of uncertainty.” In the note Bennett wrote that Aphria has a “healthy” amount of cash and the company is entering a period of uncertainty “with clear sales and earnings momentum that they should be able to resume.”

Bennett rates Aphria a buy with a $7.50 price target.

The U.S.-listed stock has lost 30.5% over the past three months, while the Cannabis ETF THCX, -2.59% has dropped 40.3% and the S&P 500 index SPX, 0.58% has declined 13.5.

MarketWatch staff writer Tomi Kilgore contributed to this article.

Cannabis Watch: See all of MarketWatch’s cannabis coverage

Lees Meer

Leave a Comment