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What to Expect from KushCo Holdings’ Q3 Earnings


Jul. 24 2020, Updated 1:30 p.m. ET

KushCo Holdings will likely report its results for the third quarter of fiscal 2020 on Wednesday. The company will have an earnings call before the market opens tomorrow. The company should release the results after the market closes. KushCo’s second-quarter results were a bit disappointing. The revenue showed a sequential decline from the first quarter. Meanwhile, the EBITDA losses were higher year-over-year. Let’s take a look at what analysts expect from the third-quarter results.

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Analysts’ Q3 estimate

Analysts expect KushCo’s third-quarter revenue to decline by 25% to $31.1 million. The revenue could show a slight increase from $30.14 million in the second quarter. For the fourth quarter, analysts expect the revenue to increase sequentially to $35.1 million. For the fiscal year, the revenue could be around $131.3 million. 

The company might report an EBITDA loss again in the third quarter of $5.6 million. However, the amount would be an improvement compared to an EBITDA loss of $7.5 million in the third quarter of 2019 and $14.8 million in the second quarter. The EBITDA losses could fall to $0.5 million by the fourth quarter if the COVID-19 situation improves.

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Analysts expect the EBITDA losses to eventually reduce by the second quarter of fiscal 2021. The company could report an EBITDA profit of $0.48 million by the third quarter of fiscal 2021.

Currently, seven analysts cover the stock. Among the analysts, four recommend a “buy,” two recommend a “strong-buy,” and one recommends a “hold.” The average target price on the stock is $2.50, which is 238% higher than the last closing price.

KushCo and peers’ stock performance

KuschCo stock fell by 63% in June. So far in July, the stock has risen by 5.1%. Most cannabis companies, specifically US cannabis companies, reported good results in their recent quarters due to rising sales amid the pandemic. The stock enjoyed some gains although there’s skepticism after Canopy Growth and Acreage’s amended acquisition deal. 

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The deal showed the marijuana industry’s distress. The issues were present even before the pandemic. However, a few companies like Curaleaf (OTCMKTS:CURLF) and Green Thumb have been expanding amid the crisis. Innovative Industrial Properties (NYSE:IIPR) has also been raising cash to expand and execute its growth strategies. 

Meanwhile, Canadian cannabis companies have been cutting costs, laying off employees, and shutting down plants to reduce capital expenditures and conserve cash. Aurora Cannabis made some restricting changes, while OrganiGram laid off 220 employees to reduce expenses. OrganiGram also delayed its third-quarter earnings to July 21.

So far in July, Aurora Cannabis stock has fallen 1.9%, while OrganiGram hasn’t gained or lost. Meanwhile, Curaleaf has fallen 4.1%, while Green Thumb has gained 0.33%, respectively.

Stay with us to learn more about the marijuana sector and how KushCo performed in the third quarter. To learn more, read What to Expect from Marijuana Stocks in July.


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