Cannabis producers’ (HMLSF) sales are expected to rise on expectations of their capturing the recreational cannabis market and taking advantage of its increased merger and acquisition activity.
We can look at analysts’ estimates to determine the level of sales for cannabis companies. In addition, by tracking analysts’ revisions, we can determine the direction of changes in estimates. In this article, we’ll discuss analysts’ estimate revisions for 2018 and 2019.
Estimate revisions for 2018
In the chart above, we can see analysts’ estimate revisions for six companies for 2018 since the beginning of the year. The biggest revision—mostly upward—in the revenue estimates of these six companies took place from January to February out of the three months presented in the chart. From February to March, estimates were broadly flat to negative. For Canopy Growth (WEED), Aurora Cannabis (ACB) (ACBFF), and Cronos (CRON), revenue estimates for 2018 remained unchanged at 251.8 million, 173.2 million, and 43.2 million Canadian dollars, respectively.
However, MedReleaf’s (MEDFF) revenue estimate was revised downward by 5% to 118.9 Canadian dollars, and Aphria’s (APHQF) estimate was revised downward by 1% to 151 million Canadian dollars. Among the six companies listed, CannTrust (TRST) was the only one that saw an upward revision in revenue by 3% to 84.2 million Canadian dollars.
Estimate revisions for 2019
Similar to what we saw in 2018, most of the six companies in the chart above have seen the biggest revision changes from January to February for the year ended in 2019. From February to March, Canopy Growth’s revenue has been revised upward by 30% to 614.5 million Canadian dollars. Similarly, MedReleaf’s revenue has been revised upward by 12% to 307 million Canadian dollars, and CannTrust’s revenue has been revised upward by 8% to 195 Canadian dollars. Aphria’s revenue has been revised upward by 3% to 474.9 Canadian dollars, while Aurora Cannabis’s and Cronos’s estimates have remained unchanged over this period.
We’ve also made note of the number of analysts that have provided the revisions. Bear in mind that the number of analysts affects the quality of estimates.
Next, let’s discuss the changes in earnings estimates for these stocks.