Ontario’s plan to delay opening up brick and mortar cannabis stores until April 1, 2019 increases our fiscal 2020 revenue and EBITDA estimates. We had previously thought that the 80 store target by July of 2019 versus an estimated 200+ stores in Alberta by that time was telling as to what was likely to be an under-penetrated Ontario market. The Ontario Cannabis Store acting as a wholesaler to private businesses while running online sales beginning on October 17th, 2018 we believe will keep average wholesale prices under $6 per gram.
We will be updating our financial forecast in an upcoming note.
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Aphria Inc. (APH-TSX)
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Valuation
We use a 19x EV/EBITDA multiple on 2020 EBITDA of about $150 million – $220 million in Net Cash = EV of $2.88 billion – $220 million Net Cash =$2.66 billion Target EV $2.66 billion / 201 million shares outstanding in 2020 = $13.25 Price Target.
We believe with the drop in share price in combination with the increase in our fiscal 2020 revenue estimates, investors should buy the shares now.
For the purposes of complying with NYSE, NASDAQ and all Self-Regulatory Organizations, Perspectec Inc. has assigned the following rating system BUY, HOLD/NEUTRAL, SELL for the securities which are the views expressed by an analyst, Independent contractor, and or an employee of Perspectec Inc. The information and opinions in these reports were prepared by Perspectec Inc. or an analyst, independent contractor. Though the information herein is believed to be reliable and has been obtained from public sources believed to be reliable. Perspectec Inc. makes no representation as to its accuracy or completeness.
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