One thing we could say about the analysts on Auxly Cannabis Group Inc. (CVE:XLY) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. 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 most recent consensus for Auxly Cannabis Group from its twin analysts is for revenues of CA$41m in 2020 which, if met, would be a huge 133% increase on its sales over the past 12 months. Prior to the latest estimates, the analysts were forecasting revenues of CA$48m in 2020. It looks like forecasts have become a fair bit less optimistic on Auxly Cannabis Group, given the substantial drop in revenue estimates.
The consensus price target fell 20% to CA$0.55, with the analysts clearly less optimistic about Auxly Cannabis Group's valuation following this update. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Auxly Cannabis Group, with the most bullish analyst valuing it at CA$0.60 and the most bearish at CA$0.50 per share. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that the analysts have a clear view on its prospects.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Auxly Cannabis Group's past performance and to peers in the same industry. The analysts are definitely expecting Auxly Cannabis Group's growth to accelerate, with the forecast 133% growth ranking favourably alongside historical growth of 78% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 32% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Auxly Cannabis Group is expected to grow much faster than its industry.
The Bottom Line
The clear low-light was that analysts slashing their revenue forecasts for Auxly Cannabis Group this year. The analysts also expect revenues to grow faster than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of Auxly Cannabis Group's future valuation. Given the stark change in sentiment, we'd understand if investors became more cautious on Auxly Cannabis Group after today.
That said, the analysts might have good reason to be negative on Auxly Cannabis Group, given dilutive stock issuance over the past year. For more information, you can click here to discover this and the 2 other concerns 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.
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