Aphria Can Now Sell Medical Cannabis Throughout the EU with the First Shipments to Germany Expected in Q4
APHA’s Bullish Stock Chart is Primed for a Breakout After Alliance Global Issues New Buy Rating and Price Target
Aphria (TSX: APHA) (NYSE: APHA) (FRA: 10E) announced this morning that the company has secured its European Union Good Manufacturing Practices certification also known as EU GMP certification. The certification was received by Aphria’s subsidiary, ARA – Avanti Rx Analytics and was issued by the Malta Medicines Authority concerning the company’s medical cannabis products for human use as well as its investigational medicinal products for human use. Malta Medicines Authority is known for having the most demanding and stringent certification thresholds in the entire European Union.
With its new EU GMP certification, Aphria can now ship its bulk and finished dried medicinal cannabis flower as well as finished medical cannabis oil from Canada to legalized locations throughout the EU. Aphria has a German subsidiary by the name of CC Pharma GmbH which it intends to leverage for its extensive distribution network throughout Germany. The company will commence its first shipments to CC Pharma in Germany in the fourth quarter of fiscal 2020.
“We believe that this is a game-changer for Aphria Inc. and will significantly advance our leadership in permissible medical cannabis markets across Europe, where demand for product is strong. With 2.4 million square feet of licensed production capacity of up to 255,000 kilograms, state-of-the-art greenhouses and labs, and our global infrastructure, we believe Aphria is well-positioned to lead in the Canadian and international markets.”
Alliance Global Initiates Coverage on APHA
Analyst Aaron Grey of Alliance Global Partners initiated coverage on Aphria’s stock today. The analyst issued a ‘Buy’ rating on shares of APHA and placed an $11 Price Target on the stock. As of today’s closing price, Grey’s price target implies a potential upside of 58.27% from these levels.
Grey believes that Germany is a major opportunity for Aphria which announced previously that the company had secured 5 of 13 available German cultivation licenses. Aphria’s subsidiary CC Pharma also provides the company with access to 13,000 pharmacies in Germany.
“We look for fundamentals to improve from continued success in the Canadian market and beginning of sales in Germany – and see potential partnerships within the U.S. and other markets as a potential catalyst for the stock,” stated Grey in his note to clients.
APHA Stock Price Action & Chart
Shares of Aphria’s TSX listed APHA stock rallied in early trading today on the EU GMP news but failed to hold on to its gains closing the day down 1% at $6.95 per share. In the United States, the company’s NYSE listed APHA shares finished trading today at $5.32, up 0.95% on the day. Across the Atlantic in Germany, Aphria’s Frankfurt listed stock closed today’s trading session at $4.84, up 3.02%.
As we highlighted in our previous article on Aphria, APHA’s chart has formed the same Inverse Head and Shoulders reversal pattern as the one Canopy Growth (TSX: WEED) (NYSE: CGC) (FRA: 11L1) broke out from last week. APHA stock attempted to breakout from its reversal formation today but failed to rise above the neckline of the pattern. A close above the neckline on a spike in volume would have provided the confirmation needed for technical traders to pile in and push shares even higher. Often it takes multiple attempts for a stock to break out of a bottom pattern such as the Inverse Head and Shoulders formation.
As you will see from the charts below, the pattern’s neckline serves as the main resistance point and for a breakout to be successfully confirmed, the stock needs to close above the neckline on a large increase in volume. APHA didn’t deliver the spike in volume necessary to push its stock over the line. Despite today’s failed breakout attempt, APHA stock is primed and baring any unforeseen negative catalysts, should break out in the coming days. Check out our previous article here to learn how to calculate APHA’s near term price target.
Charts source: Barchart.com
Disclosure: The Cannabis Investor does not hold a position in any of the stocks mentioned in this article.