Shares in Aphria Inc (TSE:APH) (OTCMKTS:APHQF) (FRA:10E) climbed today, notably outperforming a cannabis sector which veered mostly lower. It’s the latest case of musical chairs, as investors pile money into different sub-sector of the market in search of perceived value. Until prices action leadership coalesces from the top-down, more splintering can be expected.

The favorable note on Aphria (↑5.34%) came courtesy of Canaccord Genuity’s Morning Coffee market research. In it, cannabis research analyst Matt Bottomley (who’s interviewed on Midas Letter Live on several occasions), reiterated his belief in the company’s capacity to fulfill large supply orders expected to inundate the market in the coming months.

Last month’s Société des alcools du Québec MOU was really just the beginning; many more are expected, and Aphria’s off-take commitment is expected to grow. The company expects to deliver up to 12,000 kg of cannabis to SAQ annually for sale in the Quebec adult-use market through SAQ’s retail and e-commerce channels.

Perhaps more importantly, Bottomley sounded the bullhorn on valuation. Not only is the company relatively inexpensive—as in, less than half the valuation multiples as its peers—Canaccord would be buyers at today’s level. According to the note:

… Aphria remains one of the more attractive large cap Licensed Producers on its relative valuation, with a two-year fwd EV/EBITDA multiple of 8.9x (a significant discount to its most comparable peers at 20.9x), and we would remain buyers at current levels.

That’s a great soundbite from one of the cannabis industry’s best analysts. It also echoes support for Cannacord’s previously-issued C$25.50 price target on Aphria last month, which it’s obviously sticking by.

Here’s the technical take on today’s action.

Unless the broad market craters, I expect Aphria can work into the $12.50 area (on a short term basis) as valuation plays catch-up to its peers. They may still trade at a discount, buy 2.5x its peer group seems extreme. Today’s volume profile was a positive indication there’s more short term upside here:

Another outperformer was CannaRoyalty Corp. The global cannabis operator and investors showed continued resilience today in the face of sector degradation. Shares finished higher by $0.15 to $4.72/share (↑3.28%). We elucidated our thoughts and reasoning behind the move in a piece titled CannaRoyalty Corp (CNSX:CRZ) on Breakout Watch as Cannabis Investors Bet On California posted earlier today. We shall continue monitoring CannaRoyalty’s progression as the rush to lead in California continues apace.

Unfortunately, the rest of the cannabis market wasn’t so lucky. With few exceptions, the market was solidly in the red today.

Aurora Cannabis Inc. finished lower $0.33 to $7.78/share (↓4.07%). This, despite 211% YoY revenue growth, possible imminent U.S. expansion, and expected net profitability in Q4 2018. Following recent trends, cannabis earnings reports—positive or negative—are not overly-influential factors on equity prices at the present time. Aurora shares ended up defaulting in the direction of broad-based sector weakness.

Aurora Cannabis’ Executive VP Cam Battley talks about newly-released earnings, U.S. expansion plans, Aurora production capacity and more

MYM Nutraceuticals Inc had a particularly tough afternoon. The high-end organic medicinal cannabis supplements and topical products maker shed ↓$0.26 to $1.00/share on what appears to be a technically-inspired move. No news released was issued to account for the activity.

Another notable decliner was MedReleaf Corp. After a massive run which elevated prices ↑69.34%, trough-to-peak, since April 10, the inevitable pullback has commenced. We alerted Midas Letter readers back on May 1 that we expected MedReleaf to run into the $25.00-26.00 area before pulling back—and indeed this is so. Here’s what we said at the time:

We posit MedReleaf could reach somewhere in the $25-26/share range before significant pullback takes place. This would take prices at or through the January 2018 bounce-back channel, where prices consolidated for 10-days before embarking on another nasty stretch lower.

The market has designated $25.25 as the current high water mark in MedReleaf, pending buyout news. Overall, MedReleaf finished down $0.92 to $22.87/share (↓3.87%)

The rest of the cannabis market was awash in a sea of red. Nothing devastating, but rather a generalized lack of buying which has presented itself often since sector highs in January.