uploads/2019/12/cronos.jpeg

Cronos’s 2020 Estimates See Revisions in December

By

Updated

On December 27, Cronos Group’s (CRON) share price fell 4.17% to 8.97 Canadian dollars on the TSE (Toronto Stock Exchange). The company’s shares, however, rose 0.88% to $6.88 on the Nasdaq.

The stock is down YTD (year-to-date) by 41.75% on the TSE and 33.78% on the Nasdaq. Cronos stock has fallen 72.78% compared to its 52-week high of 32.95 Canadian dollars. The stock was also down 72.59% from its 52-week high of $25.10 on the Nasdaq.

How analysts are rating Cronos on the TSE in December

A total of 13 analysts are covering Cronos on the TSE as of December 30, 2019. The number of analysts covering the company first rose from five in December 2018 to 13 in July 2019. While 13 analysts continued to cover Cronos in October 2019, the number dropped to 12 in November 2019.

The analyst and investor sentiment for Cronos Group has taken a dip since December 2018. The majority of analysts have rated the stock as a “hold” in 2019. In contrast, most analysts called the stock a “buy” opportunity in December 2018.

In December 2019, two analysts rate the company as a “strong buy,” three rate it as a “buy,” seven call it a “hold,” and one rates it as a “strong sell.” The overall analyst sentiment seems to have improved slightly compared to November. Last month, two analysts rated the company as a “strong buy,” two called it a “buy,” and seven called it a “hold.” Only one called it a “strong sell.”

Analysts have given the stock a target price of 12.50 Canadian dollars, implying a potential upside of 39.35% compared to its last closing price. Its target price first increased from 19.60 Canadian dollars in December 2018 to 19.69 Canadian dollars in July 2019. Thereafter, it dropped to 19.02 Canadian dollars in October 2019 and then to 12.88 Canadian dollars in November 2019.

On December 21, as reported by CIG Research, Raymond James issued an “outperform” rating on the stock with a target price of 12 Canadian dollars.

How analysts are rating Cronos on the Nasdaq in December

A total of three analysts are covering Cronos on the Nasdaq as of December 30, 2019. The number of analysts covering the company varied from one in July 2019 to two in October 2019. In November 2019, four analysts covered the company.

Analysts have given the stock a target price of $10.05, implying an upside potential of 46.08% compared to its last closing price. Its target price dropped dramatically from $18 in October 2019 to $10.05 in November 2019.

How analysts’ revenue estimates have changed

Analysts first dramatically reduced Cronos’s fiscal 2019 revenue estimate from 119 million Canadian dollars in December 2018 to 53 million Canadian dollars in July 2019. They then raised its fiscal 2019 revenue estimate slightly to 58 million Canadian dollars in October 2019. However, they again reduced it to 49 million Canadian dollars in November 2019 and to 48 million Canadian dollars in December 2019.

Analysts also dramatically reduced Cronos’s fiscal 2020 revenue estimate from 263 million Canadian dollars in December 2018 to 165 million Canadian dollars in July 2019. Thereafter, they increased their revenue estimate to 194 million Canadian dollars in October 2019. However, they again reduced their estimate 153 million Canadian dollars in November 2019 and 152 million Canadian dollars in December 2019.

The downward change in Cronos’s fiscal 2021 revenue estimates has been less intense than those for fiscal 2019 and fiscal 2020. Analysts first estimated the company’s fiscal 2021 revenue to be 445 million Canadian dollars in December 2018. They later revised the estimate down to 366 million Canadian dollars in July 2019 but again increased it to 375 million Canadian dollars in October 2019. Analysts then reduced Cronos’s fiscal 2021 revenue estimate to 336 million Canadian dollars in November 2019. However, they increased the company’s revenue estimate to 346 million Canadian dollars in December.

How analysts’ EBITDA estimates have changed for Cronos Group

In December 2018, analysts expected Cronos to become EBITDA positive in fiscal 2019. However, the deteriorating cannabis industry environment forced analysts to dramatically reduce CRON’s fiscal 2019 adjusted EBITDA estimates. Analysts first reduced the company’s fiscal 2019 EBITDA estimate from 38 million Canadian dollars in December 2018 to -31 million Canadian dollars in July 2019. They further reduced their fiscal 2019 EBITDA estimate to -60 million Canadian dollars in October 2019 and then to -72 million Canadian dollars in November 2019. Now, in December 2019, analysts expect Cronos’s fiscal 2019 EBITDA to be -71 million Canadian dollars. Intensifying pricing pressures, the ongoing vape crisis, and black-market competition are the key factors affecting Cronos’s profitability.

In December 2018, analysts had also estimated CRON’s fiscal 2020 adjusted EBITDA to be 94 million Canadian dollars. They reduced this estimate to 19 million Canadian dollars in July 2019 and -18 million Canadian dollars in October 2019. Analysts now expect the company’s fiscal 2020 adjusted EBITDA to be -49 million Canadian dollars.

Analysts expect Cronos Group to become EBITDA-positive in fiscal 2021. They expect the company’s fiscal 2021 adjusted EBITDA to be 26 million Canadian dollars. Previously, analysts had expected Cronos’s fiscal 2021 adjusted EBITDA to be 139 million Canadian dollars in December 2018 and 90 million Canadian dollars in July 2019. In October, they expected it to be 73 million Canadian dollars, and in November, they expected it to be 25 million Canadian dollars.

More From Market Realist