Aphria could be a strong winner as coronavirus forces increased cannabis demand

473 0

The cannabis company is uniquely positioned to weather the storm of inactivity brought on by COVID-19

Most industries are inevitably being affected by the outbreak of the coronavirus that continues to expand among all states. With requests from authorities to stay home and people opting for self-quarantine, the demand for cannabis has increased significantly and some companies are getting more benefits than others. In the development of this public health emergency, it seems to be that Aphria is featuring as one of the most favored companies in the cannabis sector reporting a big jump in its stock. Christopher Carey, an analyst from Bank of America, refers to the momentum Aphria Inc. is having to face this pandemic and how the company is poised to see its stock spike.

According to Carey, Aphria “could give investors defensiveness” as more medical customers are seeking to get prescriptions and recreational customers are going to spend more of their free time smoking. This analysis comes with good timing; after last year, investors were truly concerned that big marijuana companies were running out of funds. “In a new sector, where companies have had poor execution and strained balance sheets, underperformance is reasonable,” Carey said in a research note. “However, with cannabis demand accelerating, we see the potential for APHA, amidst the recent pullback, to offer defensive growth exposure.”

Carey stated that Aphria has a solid cash flow on hand that represents nearly 53% of the total market value for the company. Even though its rivals are struggling, the company seems to be gaining share value and some glimpses of making a profit. Even though Carey changed Aphria status from “buy” to “neutral” he did cut his price target on the stock to $3.44 from previous $6.13.