More people stuck at home has led to a higher demand for cannabis, and Aphria Inc. is one of the best-positioned companies to take advantage of that trend, an analyst at Bank of America said.
“Our checks across North America were consistent: regardless of region, cannabis purchases have accelerated,” analyst Christopher Carey said in a note. “While likely on pantry loading, it’s not unreasonable to think there will be some boost to per capita consumption as people stay at home longer.”
This implies that pot is a defensive category, like alcohol and tobacco. Carey upgraded Aphria to buy from neutral, although he cut his price target to $5 from $8 to reflect the impact of market turbulence on cannabis shares. The company “could increasingly take a disproportionate share of increased demand” as its peers struggle, he said.
Carey also raised Organigram Holdings Inc. to neutral from underperform, leaving his price target at $2.50. The company appears capable of delivering consistent sales and profit, unlike many of its peers, with sufficient liquidity and free cash flow in sight, he said.
Read more at bnnbloomberg.ca
