Analysts Have Been Trimming Their Canopy Growth Corporation (TSE:WEED) Price Target After Its Latest Report
It's been a sad week for Canopy Growth Corporation (TSE:WEED), who've watched their investment drop 18% to CA$5.10 in the week since the company reported its third-quarter result. Revenues came in 23% better than analyst models expected, at CA$90m, although statutory losses ballooned 424% to CA$2.62, which is much worse than what was forecast. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Check out our latest analysis for Canopy Growth
After the latest results, the consensus from Canopy Growth's nine analysts is for revenues of CA$299.4m in 2025, which would reflect an uncomfortable 17% decline in revenue compared to the last year of performance. The loss per share is expected to greatly reduce in the near future, narrowing 89% to CA$1.42. Yet prior to the latest earnings, the analysts had been forecasting revenues of CA$325.9m and losses of CA$1.59 per share in 2025. While the revenue estimates fell, sentiment seems to have improved, with the analysts making a favorable reduction in losses per share in particular.
The analysts have cut their price target 17% to CA$7.29per share, suggesting that the declining revenue was a more crucial indicator than the forecast reduction in losses.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that revenue is expected to reverse, with a forecast 14% annualised decline to the end of 2025. That is a notable change from historical growth of 6.2% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 10% per year. It's pretty clear that Canopy Growth's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. Even so, long term profitability is more important for the value creation process. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Canopy Growth going out to 2026, and you can see them free on our platform here..
Plus, you should also learn about the 4 warning signs we've spotted with Canopy Growth (including 1 which is a bit unpleasant) .
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
