Charlotte’s Web: Analysts Cut Targets after Weak Q3

Charlotte’s Web Holdings (CWEB) (CWBHF) reported its fiscal 2019 third-quarter earnings results on November 13. In the quarter, the company’s revenue came in at $25.1 million, short of analysts’ estimate of $32.51 million. It also reported a net loss of $0.01 per share against analysts’ expectation of $0.05 per share.

Its lower-than-expected third-quarter earnings led to a fall in its stock price. On November 13, CWEB fell 7.5% to close at 12.28 Canadian dollars. Let’s look at analysts’ price targets and ratings. For more on CWEB’s third-quarter performance, read Charlotte’s Web: Q3 Earnings Missed Analysts’ Estimates.

Charlotte’s Web: Analysts Cut Targets after Weak Q3

The latest price target for Charlotte’s Web

CWEB’s weak third-quarter earnings appear to have prompted Canaccord Genuity, Piper Jaffray, and PI Financial to lower their price targets. Canaccord has cut its price target from 29 Canadian dollars to 17 Canadian dollars, Piper Jaffray has lowered its price target from $25 to $15, and PI Financial has lowered its price target from 25 Canadian dollars to 20 Canadian dollars.

Overall, analysts’ consensus price target fell from 31.95 Canadian dollars to 24.05 Canadian dollars. Analysts’ new average price target represents a 12-month potential return of 95.9% from its November 13 closing price. Earlier this month, before CWEB reported its third-quarter earnings, Eight Capital lowered its price target from 31 Canadian dollars to 23 Canadian dollars, while Eight Capital reduced its price target from 28 Canadian dollars to 25 Canadian dollars.

Meanwhile, CWEB’s peers MedMen Enterprises (MMEN) (MMNFF), Curaleaf Holdings (CURA) (CURLF), and Cresco Labs (CRLBF) (CL) were trading at discounts of 119.1%, 136.6%, and 126%, respectively, to their price targets on November 13.

Analysts’ ratings for CWEB

There have been no rating changes since Charlotte’s Web reported its third-quarter earnings results. Since last month, there’s actually been an increase in CWEB’s coverage. On November 13, nine analysts were covering the stock compared to eight on October 13. Of these nine analysts, two have given it “strong buy” ratings, six have given it “buys,” and the remaining one favors a “hold.” In the graph above, we can see that CWEB has received increased coverage since the beginning of this year. At the beginning of this year, only three analysts covered the company.

Let’s look at analysts’ ratings for the company’s peers:

  • For MedMen, analysts favor a “hold” rating. Of the eight analysts covering the stock, six give it “hold” recommendations. For more info, read MedMen: Analysts’ Views before Its Earnings.
  • Analysts are bullish on Curaleaf. Of the eight analysts that follow the stock, seven give it a “buy.”
  • All ten analysts that follow Cresco Labs call it a “buy.”

YTD stock performance

So far, CWEB has lost 19.1% of its stock value this year as of November 13. Its weak second– and third-quarter performances and weakness in the cannabis sector appear to have dragged its stock down. Meanwhile, during the same period, peers MedMen, Curaleaf, and Cresco Labs have returned -65.2%, 5.7%, and 12.3%, respectively.

Today, Canopy Growth reported lower-than-expected second-quarter earnings results for its fiscal 2020. Read our analysis in Canopy Growth Stock Falls after Weak Q2 Earnings. Aurora Cannabis is set to report its first-quarter earnings today after the market closes. For a look at analysts’ estimates, read Why ACB’s Upcoming Earnings Aren’t Exciting Analysts. Don’t forget to check out 420 Investor Daily for more cannabis-related news.