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Charlotte’s Web Holdings: What to Expect from Q3 Results


Oct. 23 2019, Updated 1:23 p.m. ET

So far, Charlotte’s Web Holdings (CWBHF) (CWEB) has gained 19.7% year-to-date. Since the company’s disappointing second-quarter earnings in August, the stock has lost close to 38.8%. Let’s see how analysts’ estimates and ratings look before the company’s third-quarter results.

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Charlotte’s Web Holdings’ third-quarter results

Charlotte’s Web will report its third-quarter results next month. Analysts expect the company’s revenues to be around $34.2 million in the third quarter—an increase of 93% year-over-year. Analysts also expect the company to report an EPS of $0.06 in the third quarter—compared to its EPS of $0.03 in the third quarter of 2018.

Charlotte’s Web Holdings will likely report a positive EBITDA of $7.5 million. Previously, I discussed how a positive EBITDA is important for a company. A negative EBITDA implies that a company’s operating expenses are higher.

Aphria (APHA) reported a positive EBITDA in its earnings for the first quarter of fiscal 2020. The company beat analysts’ estimate of a loss of 2.2 million Canadian dollars. Aphria reported a positive EBITDA of 1.0 million Canadian dollars. MedMen (MMEN) will likely report a negative EBITDA of $38.3 million in its fourth-quarter earnings.

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Second-quarter performance

Investors were disappointed with Charlotte’s Web Holdings’ second-quarter results. The company missed the top-line and bottom-line estimates. However, the company reported a 45% year-over-year increase in its revenues to $25.02 million. The company harvested close to 675,000 pounds of hemp. Charlotte’s Web Holdings also introduced new products in the second quarter including hemp extract-infused CBD gummies in three flavors and a 12-SKU pet product line. Also, the company made some leadership changes in the second quarter.

Analysts’ estimate for Charlotte’s Web Holdings stock

Analysts cut the target price for Charlotte’s Web Holdings stock after its second-quarter results. However, analysts have a bullish outlook on the stock. Notably, the stock mainly has “buy” ratings. Among the eight analysts that cover the stock, two recommended a “strong-buy” and six recommended a “buy.” The target price is 31.9 Canadian dollars, which is 87% higher than Charlotte’s Web Holdings’ current trading price.

Recently, along with 15 other cannabis stocks, PI Financial cut the target price for Charlotte’s Web Holdings to 28 Canadian dollars from 30 Canadian dollars with a “buy” rating.

Canopy Growth (CGC) (WEED) mainly has “hold” ratings. The stock has a target price of 31.5 Canadian dollars, which is 50% higher than its current trading price. Canopy Growth will report its results for the second quarter of fiscal 2020 next month.

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Likewise, Aurora Cannabis (ACB) will report its earnings for the first quarter of fiscal 2020 next month. The stock mainly has “hold” ratings. The target price for Aurora Cannabis stock is 8.33 Canadian dollars, which represents an upside potential of 78% from the current trading price. Recently, the company signed a licensing agreement with EnWave. To know more, read Aurora Cannabis and EnWave Signed an Agreement.

Stock performance

Charlotte’s Web Holdings stock has fallen 4.4% in October. Meanwhile, MedMen, Aurora Cannabis, and Canopy Growth have fallen 27.3%, 18.4%, and 7.7%.

For analysts’ ratings and marijuana-related news and updates, please follow 420 Investor Daily.


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