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How Charlotte’s Web Holdings’ Upside Potential Compares to Peers

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Feb. 21 2019, Published 8:08 a.m. ET

Analysts

Charlotte’s Web Holdings (CWBHF) has received a “strong buy” rating from one analyst, while three analysts polled by Thomson Reuters on February 20 have rated it as a “buy” or some equivalent. The stock’s mean consensus price target of 28.77 Canadian dollars represents a potential upside of 53.7% over its February 20 closing price. Earlier this month, Cormark Securities initiated coverage on Charlotte’s Web Holdings with a “buy” rating and a target price of 25.50 Canadian dollars.

Aurora Cannabis (ACB), Canopy Growth (WEED), Tilray (TLRY), and Aphria (APHA) are trading 47.3%, 23.6%, 61.8%, and 21.3% below their consensus price targets, respectively.

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Fourth-quarter earnings

Analysts polled by Thomson Reuters expect Charlotte’s Web Holdings to post revenues of $24.5 million in the fourth quarter as compared to $17.7 million in the sequential quarter. The company’s revenues are expected to more than double this year.

Charlotte’s Web Holdings is expected to post EBITDA of $8.3 million in the fourth quarter as compared to $5.4 million in the sequential quarter. The company’s EBITDA is expected to rise to $55.8 million in 2019 from $23.5 million in 2018.

Charlotte’s Web Holdings is valued at a PE multiple of 44.38x its 2019 earnings and 24.49x its 2020 earnings. Cannabis companies have commanded high valuation multiples, as markets expect these companies to deliver strong earnings growth in the coming years.

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