Aphria earnings were reported after market close on Thursday, and shares soared as much as 41% during Friday’s trading after the impressive results.
And, “Armchair Trader” Members were able to make 214% in less than a week! Read the original recommendation here.
Aphria stock price is likely to continue upwards suggesting that another options trade may be beneficial!
by Ian Harvey
August 04, 2019
Aphria Inc (NYSE: APHA)
Canada's third largest marijuana cultivator, Aphria earnings shocked Wall Street after trading last Thursday by posting a huge sales boost during its fiscal fourth quarter.
Aphria earnings also issued guidance for fiscal 2020 – along with posting a profit — was both rarities among cannabis companies. Aphria became the first major Canadian cannabis company to report a net profit.
"It's a new day at Aphria," Interim CEO Irwin Simon said in a statement.
He added later: "Over the last six months, our organization identified immediate priorities to help generate substantial progress near-term and long-term. We built upon existing business fundamentals and capabilities, streamlined processes, strengthened governance, and focused on building brand awareness."
Aphria Earnings Report…..
The Canada-based weed producer reported fiscal fourth-quarter net income of C$15.8 million ($11.9 million), or 5 cents a share, compared with losses of $C5 million, or 43 cents a share, in the year-ago period.
Aphria’s recreational cannabis sales grew 158% to C$18.5 million from the prior quarter, or roughly 15% of the company’s net revenue of C$128.6 million for the fiscal quarter that ended in May.
The results are a remarkable shift from last quarter, when Aphria earnings reported a significant drop in gross margin, revenue that missed expectations and a C$50 million writedown on its Latin American assets.
Interim Chief Executive Officer Irwin Simon indicated there’s no immediate plan to replace him with a permanent leader. “The leadership team we have in place is solid; there is no management void at Aphria,” he said. “There is no emphasis on ‘interim’ by me and my team.”
YOU NEED TO BE IN TO PROFIT!
Its fiscal 2020 guidance was likely one of the other reasons shares rose more than 30% in the extended session Thursday. In the conference call, executives said they expected revenue net of excise taxes in the range of C$650 million to C$700 million. Simon said the company aims to hit a C$1 billion run rate by the end of the fiscal year.
About half of that projected 2020 revenue will be from its pharmaceutical distribution, the result of its acquisition of CC Pharma, which closed this year. Aphria paid €18.92 million ($21 million) in cash to former CC Pharma shareholders.
The company is “building strategic partnerships and alliances” in the U.S. CBD market, where it doesn’t currently have a presence. “Let me be clear: we’re always looking for opportunities in the U.S., but it needs to be the right opportunity, one that will create real and long-term value for our shareholders,” Simon said.
Chief Financial Officer Carl Merton reiterated the company’s intent to generate C$1 billion in annualized revenue by the end of calendar 2020.
Analyst Justin Keywood said a government contact at the distribution level had offered “very positive feedback” on Aphria in a recent call.
“The quality of Aphria’s products was mentioned as one of the best among all LPs and our contacts also said the company has greatly improved operationally,” the analyst wrote in a note to clients. “We also heard there were strong efforts from Aphria to improve relationships with its partners and distributors following the transition last year.”
Jefferies analyst Ryan Tomkins agreed. “In the context of poor sector sentiment, profitability becoming an increasing focus and guidance scarce, this print is very reassuring and supports our conviction in the name,” he wrote in a note to clients. Tomkins also rates the stock as buy.
A NICE POTENTIAL PROFIT TO END THE WEEK!
Consider this options trade…..
Buy the APHA JAN 17 2020 10.000 CALL at approximately $0.40.
GREED CAN BE THE UNDOING OF A GOOD PROFIT!
With Aphria firmly on the comeback trail under the watchful eye of
interim CEO Irwin Simon, there's arguably a lot to like about this beaten-down
stock. Such as…..
1. An attractive valuation - despite Aphria's sizable
move during Friday's session, its stock is still trading at only around 2.3
times calendar year 2020's projected sales; and is much cheaper than its peers.
2. International expansion – by having built one of the widest commercial footprints outside Canada.
3. Great balance sheet - the company, after earnings, has CA$571 million in cash, cash equivalents, and liquid marketable securities, giving them access to non-dilutive sources of capital.
PATIENCE PAYS OFF!
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AS ALWAYS THE DECISION IS YOURS!
An Important Note: That any suggestions for options trade considerations require investors/traders to use their own discretion as to when to enter or exit! As well, it is advisable to do further research and due diligence before executing your trade.
It is sometimes best to exit a trade, if there is already sufficient profit accrued, before an earnings report is presented. GREED can be the undoing of a nice profit!