According to Cowen & Co analyst Vivian Azer, the first analyst to cover pot stocks, sales of marijuana in the U.S. are on track to reach around $80 billion by 2030. Right now, both legal and illicit sales of the drug in the U.S. total at least $50 billion. In Canada, it’s estimated that medical and recreational revenue will total C$12 billion by 2025. And it’s estimated that sales will reach $31 billion by 2025 in the 43 countries that have already legalized medical cannabis or are expected to do so in the near-term.
It’s no doubt that this industry is booming and makes for a compelling investing opportunity, but which stocks are worth buying now?
Analysts say both of the stocks discussed below have significant upside ahead and currently make for interesting investments in the marijuana space.
Here’s what you need to know about these two companies.
Aphria (NYSE: APHA)
Aphria (NYSE: APHA) is already up 75% so far this year, but analysts say it could climb far higher.
Four analysts give APHA a Buy rating and the average price target for the stock is $15.33, suggesting possible upside of 54.38% over the next twelve months.
Aphria is one of the lowest-cost Canadian producers, and is a big player in the medical marijuana space and has a growing international presence.
The company had a rough go of it in the latter half of 2018, after the company was caught up in a sticky legal situation that came with a hostile takeover attempt, as well as the departure of Aphria’s CEO.
Then a short seller alleged that insiders had profited from Aphria’s acquisitions of a few international businesses at inflated profits. But a special board committee recently found that the price paid for these businesses was acceptable and said that the assets are progressing as hoped.
In reaction to this news, Clarus analyst Noel Atkinson reiterated his Buy rating on the stock and upped his price target for APHA to $22.75 – 129% higher than Thursday’s closing price.
“Aphria’s list of near-term operational milestones is significant, and successful execution in a timely fashion could transform the Company both in terms of financial results and investor sentiment,” Atkinson wrote in a note to clients. “If management can execute, there is the potential for very substantial re-rating of the stock price from current levels.”
Zynerba Pharmaceuticals (NASDAQ: ZYNE)
You may not have heard of Zynerba Pharmaceuticals (NASDAQ: ZYNE) before, but this is a stock worth having on your radar.
The clinical-stage biotech is currently in trials for a promising new cannabinoid (CBD) gel, ZYN002. The groundbreaking treatment would be the first and only patented permeation-enhanced CBD gel for delivery through the skin and into the circulatory system. This allows the drug to be delivered without using the digestive process thus minimizing psychoactive effects, drug-drug interactions, and avoids digestion of the drug through the liver.
Zynerba is aiming to treat rare neuropsychiatric conditions like Fragile X syndrome and autism spectrum disorder with the gel, and confirmed earlier this year that it is “evaluating opportunities for FDA fast-track, breakthrough status, and/or priority review” for ZYN002.
HC Wainwright analyst Oren Livnat reiterated his Buy rating on the stock on March 18 and set a price target of $23 – 198% higher than the current price.
“We reiterate our Buy rating and see the current $105M market cap ($27M EV) leaving remarkable upside potential on positive data; as our $23 price target still reflects only a 35% probability of success in FXS,” Livnat wrote in a note to clients. Investors should keep their eyes out for data from Zynerba’s FXS program, which is due later this year. “We remain optimistic for positive data,” Livnat wrote.
Three analysts are currently following the stock, and their current price target for ZYNE is $20, indicating possible upside of 159% over the next twelve months.