Aphria Gets Boost From Upgrade; Global Cannabis Market Flourishes Again

Aphria stock (NASDAQ:APHA), (TSX:APHA) got a boost yesterday, after receiving an upgrade from Stifel analyst W. Andrew Carter, gaining more than 8.5% at the close on both the NASDAQ and Toronto Stock Exchange.

The Ontario-based marijuana grower closed at $4.68 in New York and at C$6.35 ($4.66) in Toronto, on news that Carter raised his rating on the stock to ‘buy,’ from ‘hold’ and increased his price target to C$8 from C$5.30.

In a note to investors, Carter reportedly said the market is undervaluing Aphria’s fundamentals. He predicts the company’s cash reserves coupled with revenue growth potential will allow it to gain market share.

In May, Cantor Fitzgerald lowered its target on Aphria from C$9.44 from C$9.85.

Daily NASDAQ Aphria Shares

Stability Returning, ETF Manager Claims

Volatility in the cannabis sector has been a contributing factor in the decision of a growing number of investors to stick to the sidelines in the last year. But, according to one of the largest Canadian exchange-traded fund managers that has been at the forefront of the marijuana space, the turbulence in pot stocks is abating.

Horizons ETFs Management says there has been a decline in pot-stock volatility since the beginning of 2020. Although the economic disruption caused by the COVID-19 pandemic has disrupted that trend, it believes signs of stability are emerging. These were the major factors that directed Horizons’ recent rebalancing of both its Horizons Medical Marijuana Life Sciences (TSX:HMMJ) and Horizons US Marijuana Index ETF (NLB:HMUS). [Editor's note: both funds are traded on Canadian exchanges only; they currently do not have US listed counterparts.]

“Following volatility that impacted nearly all asset classes across global markets in March, marijuana companies saw a strong recovery in the first two months of Q2 2020,” said Steve Hawkins, president and CEO of Horizons ETFs. “HMMJ was up more than 15% for the three months ending at June 30, 2020."

“While there is volatility within the marijuana space again, the investing case remains strong: after Canadian adult-use cannabis sales set new record highs in March they remained consistently strong into April, reaching over $180 million."

Vancouver-based Agraflora Organics International (OTC:AGFAF), (CSE:AGRA), which has growing facilities in Ontario and British Columbia, along with an edibles manufacturing plant in Winnipeg, is one of the companies added to the ETF. The other is cbdMD (NYSE:YCBD), a CBD oil manufacturer based in North Carolina.

Horizons ETFs Management announced the additions as part of its regularly scheduled rebalancing last Friday.

Yesterday, shares of cbdMD were up almost 10.5% in afternoon trading on the New York Stock Exchange. They closed at $2.48, registering a daily gain of 3.77%, while shares of Agraflora Organics was up about 0.8% on the US OTC market in afternoon trading. It, however, closed down 1.07% on the day.

HMMJ was the world's first ETF that offered direct exposure to businesses in the marijuana industry. It has gained about 15.6% in the last three months, while HMUS has gained 23.8% in that time.

Spending In Legal Weed Market Grew Nearly 50% In 2019

According to the latest figures from cannabis data firm BDSA, worldwide spending in the legal cannabis market grew by about 46% to $14.8 billion from 2013 to 2019, with last year marking the largest single-year gain.

Based on the data compiled by Arcview Market Research and BDSA, the global market for legal weed is forecast to grow an additional 38% to hit $20.4 billion by the end of this year. Longer term predictions claim by 2025, the market will hover around $46.8 billion.

In the US alone, the legal cannabis market grew by 36.5% to $12.4 billion in 2019.