Aphria Inc. (APHA.TO) (APHA.N), a target of a short seller presentation earlier this week, just got its first downgrade from the Street. Eight Capital’s Graeme Kreindler cited uncertainty around the company following Monday’s allegations for his downgrade to neutral from buy.

Aphria’s management team needs to make “significant strides” to rebuild trust and investor confidence in the market, Kreindler writes in a research note. He remains uncertain with respect to future legal and regulatory issues.

Aphria shares fell 44 per cent over the prior two trading sessions following Quintessential Capital’s short analysis at the Kase Learning Shorting conference, prompting Kreindler to subsequently amend his price target 68 per cent to $7 per share from $22 per share. Shares extended the decline Wednesday in Toronto, down 2.6 per cent.

The potential for Aphria to partner or be acquired by big players in the alcohol, tobacco or pharmaceuticals industries has likely decreased “significantly” in the short term following release of the short report, Kreindler wrote, while potential partners will likely look elsewhere in the cannabis universe. On Monday, marijuana producer Cronos Group Inc. confirmed it’s in talks about a potential investment from Altria Group Inc.

Eight Capital’s downgrade follows GMP Securities analyst Martin Landry removing his price target and putting his rating under review Tuesday.

Cannabis Canada is BNN Bloomberg’s in-depth series exploring the stunning formation of the entirely new – and controversial – Canadian recreational marijuana industry. Read more from the special series here and subscribe to our Cannabis Canada newsletter to have the latest marijuana news delivered directly to your inbox every day.