Wall Street Has a Bullish Outlook for Aphria in March

Aphria (NYSE:APHA) is one of the cannabis stocks that investors and analysts still like. They’re confident that the stock will outperform. Despite being a small company compared to its peers, Aphria has strengthened its position. The company has a strong cash position despite the financial crisis in the industry. Wall Street has a positive outlook on the stock.

Analysts’ bullish outlook for Aphria in March

Analysts have a bullish outlook for Aphria this month. Let’s take a look at analysts’ month-over-month revisions for Aphria’s revenue and other financial numbers. After Aurora Cannabis (NYSE:ACB) and Hexo’s (TSE:HEXO) string of bad news, analysts revised and lowered the revenue and other financial estimates for most cannabis stocks in March. However, the revisions look positive for Aphria. In March, analysts haven’t decreased Aphria’s revenue estimate for fiscal 2020. For fiscal 2020, analysts lowered the revenue estimates to 542 million Canadian dollars from 543 million Canadian dollars in February.

For fiscal 2021, analysts expect Aphria’s revenue to rise more. They increased the estimate to 713 million Canadian dollars from 701 million Canadian dollars in February. For fiscal 2022, the revenue could be around 792 million Canadian dollars.

Analysts expect Aphria to continue reporting a positive EBITDA. The March estimate for the fiscal 2020 EBITDA remains the same at 27 million Canadian dollars. Analysts expect an EBITDA of around 95 million Canadian dollars from 93 million Canadian dollars in February for fiscal 2021. For fiscal 2020, they expect the EBITDA to increase to 132 million Canadian dollars.

Growth prospects

Previously, I discussed how Aphria has tremendous growth potential under Irwin Simon’s leadership. The company has continuously reported profitability and a strong balance sheet despite being part of a struggling yet evolving industry. Read Is Aphria a Good Cannabis Pick for 2020? to learn more.

Most of the analysts that cover Aphria stock have a bullish rating. Currently, 14 analysts cover the stock. Among the analysts, seven recommend a “buy,” three recommend a “strong-buy,” and four recommend a “hold.” Recently, Bank of America upgraded Aphria due to the rising demand for cannabis. Bank of America analyst Christopher Carey thinks that Aphria is in a good position to handle the rising demand compared to its peers.

Carey upgraded the stock from “neutral” to “buy.” However, he lowered the target price for Aphria to 5 Canadian dollars from 8 Canadian dollars. Bank of America also upgraded OrganiGram (NASDAQ:OGI) stock from “underperform” to “neutral.” Carey kept the target price unchanged at 2.50 Canadian dollars. OrganiGram is another strong cannabis stock with growth potential.

The average target price for Aphria is 11.07 Canadian dollars. The target price shows that the stock has an upside potential of 181% from its last trading price. Notably, the stock closed at 3.94 Canadian dollars on Tuesday.

Aphria and cannabis stocks are outperforming

Aphria stock closed 5.9% higher on Tuesday, while Aurora Cannabis, Hexo, and OrganiGram stock gained 5.0%, 5.4%, and 8.6%. Aurora Cannabis and Hexo are already at the risk of getting delisted. A rise in the stock price could save their stocks from delisting. So far, Aphria has fallen 26.2% in March.

The coronavirus pandemic is taking a toll on global markets. The cannabis industry is seeing a surge in demand since it’s an “essential item.” People are stocking up on marijuana like other essentials during the coronavirus pandemic. The global crisis has increased cannabis sales and boosted cannabis stocks. However, the marijuana industry still has some challenges. Cannabis still isn’t a legal substance under federal law. To learn more, read Coronavirus: Marijuana Industry Asks for Federal Business Relief.