Aphria Inc. shares soared about 14% Friday to lead the cannabis sector, after Jefferies started coverage of the stock with a buy rating.
Analyst Owen Bennett assigned Aphria APHA, +14.66% APHA, +14.62% a C$15 ($11) price target that is 115% above its current trading level, highlighting the disconnect between the valuation and the company’s strategic positioning.
“On our strategic scorecard Aphria scores highly, and third overall behind only Canopy and Aurora,” Bennett wrote in a note to clients. “Despite its strong global outlook, its valuation is the cheapest across our space, with allegations around inflated assets/insider deals weighing.”
Aphria has weathered a scandal surrounding its acquisition last year of Latam Holdings Inc., after short sellers said the deal was overpriced and that insiders were undisclosed beneficiaries. The company formed a special committee to investigate those allegations and concluded that there were conflicts of interest