Following its second quarter results PI Financial analyst Jason Zandberg is raising his price target on Aphria Inc. (Aphria Inc. Stock Quote, Chart, News: TSXV:APH).

Aphria today reported its Q2, 2016 results. The company earned $945,679 on revenue of $5.22-million, a topline that was up 19.5 per cent over Q1.

“I am most proud of the best-in-class and sustainable successes delivered by Aphria,” said CEO Vic Neufeld. “First public licensed producer to report consecutive positive quarterly operating results. First public LP to report consecutive quarters with net profits. First public LP to license its cultivation intellectual property. Diversification with non-cultivation assets. Low-cost producer status. The best customer service, as determined by Lift. Health Canada approval process for part II expansion under way. Significant progression on part III expansion. Cash on hand to pay for part II and part III expansions. Oil sales growing to over 10 per cent of revenue. One hundred employees and growing. Diversification into Arizona and the United States. Our primary focus continues to be building a strong, diversified and profitable market leader for our shareholders. Clearly, Aphria continues to outperform.”

Zandberg says Aphria’s results were in-line with his expectations. He notes that cannabis oil sales were a factor in this quarter.

“The Company sold 639 kilograms of MMJ (or equivalent) in the second quarter up 9% over Q1,” says the analyst. “Of the 639kg, 10% or roughly 64kg were from cannabis oil. This is the first quarter of oils sales as APH received its oils license in the final days of the quarter and thus sales were negligible. The average selling price per gram was $8.18, higher than the price of $7.48 reported in Q1 FY17 (ending Aug 31) offsetting the slightly lower than expected grams sold. The increase in price per gram was likely the result of oils sales which sell at higher price per gram equivalent.”

In a research update to clients today, Zandberg maintained his “Buy” rating on Aphria, but raised his one-year price target on the stock from $5.50 to $6.00. He says the increase is due to an increase in peer multiples.

Zandberg believes Aphria will generate EBITDA of $4.16-million on revenue of $20.2-million in fiscal 2017. He expects these numbers will improve to EBITDA of $14,9-million on a topline of $42.2-million the following year.