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“Stalking stocks one company at a time.”
Ticker: APHA
An Opportunity to Buy the Dip
Distribution revenue fell from $99.1M in the previous quarter, to $82.2M according to the earnings report made by Aphria after market hours on Thursday. The company noted the pandemic as the primary reason for the decline in revenue. Aphria wrote down $65 million due to COVID-19 related costs; with a potential vaccine, these future costs would disappear and improve the outlook going forward.
The market reaction is overblown. The market’s interpretation of the quarter seems to create opportunity. The gross contribution margin was the same as last quarter, even with less revenue. Here is an important question: when will APHA start the lucrative strategy of selling high margin cannabis through its 13,000 pharmacies? The knowledge that this is forthcoming is the purpose of purchasing the stock. They just started shipping products as they disclosed last week. As for cannabis sales in Canada, there are no issues. Volumes of sales will continue to go up rapidly. The price depression will evolve upwards eventually just like Colorado.
They ought to be able to get all revenue lines heading in the right direction sooner than later. The markets interpretation of the quarter seems to create opportunity
Here are screenshots from Webull after market hours reflecting the company data and financials. The careful review which led to me buying APHA prior to the hype with the vice presidential debate includes the following:
Brief – Income – My current position including Stop/Loss; Analysis Price Target
Sources:
https://seekingalpha.com/article/4374534-aphria-buying-opportunity-on-horizon
Webull
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