Analysts Have Just Cut Their Sundial Growers Inc. (NASDAQ:SNDL) Revenue Estimates By 16%
The analysts covering Sundial Growers Inc. (NASDAQ:SNDL) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for next year. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.
Following the downgrade, the latest consensus from Sundial Growers' five analysts is for revenues of CA$89m in 2021, which would reflect a decent 20% improvement in sales compared to the last 12 months. Prior to the latest estimates, the analysts were forecasting revenues of CA$106m in 2021. The consensus view seems to have become more pessimistic on Sundial Growers, noting the substantial drop in revenue estimates in this update.
See our latest analysis for Sundial Growers
Notably, the analysts have cut their price target 43% to CA$0.40, suggesting concerns around Sundial Growers' valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Sundial Growers at CA$1.01 per share, while the most bearish prices it at CA$0.20. We would probably assign less value to the forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. With this in mind, we wouldn't rely too heavily on the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that Sundial Growers' revenue growth will slow down substantially, with revenues next year expected to grow 20%, compared to a historical growth rate of 52% over the past year. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 6.5% next year. Even after the forecast slowdown in growth, it seems obvious that Sundial Growers is also expected to grow faster than the wider industry.
The Bottom Line
The clear low-light was that analysts slashing their revenue forecasts for Sundial Growers next year. Analysts also expect revenues to grow faster than the wider market. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. Overall, given the drastic downgrade to next year's forecasts, we'd be feeling a little more wary of Sundial Growers going forwards.
As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with Sundial Growers' financials, such as major dilution from new stock issuance in the past year. For more information, you can click here to discover this and the 3 other risks we've identified.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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