The analyst covering Kuuhubb Inc. (CVE:KUU) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for next year. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.
After the downgrade, the single analyst covering Kuuhubb is now predicting revenues of US$20m in 2021. If met, this would reflect a substantial 139% improvement in sales compared to the last 12 months. Prior to the latest estimates, the analyst was forecasting revenues of US$25m in 2021. The consensus view seems to have become more pessimistic on Kuuhubb, noting the substantial drop in revenue estimates in this update.
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 clear from the latest estimates that Kuuhubb's rate of growth is expected to accelerate meaningfully, with the forecast 139% revenue growth noticeably faster than its historical growth of 14% p.a. over the past three years. Compare this with other companies in the same industry, which are forecast to grow their revenue 1.7% next year. It seems obvious that, while the growth outlook is brighter than the recent past, the analyst also expect Kuuhubb to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that the analyst cut their revenue estimates for next year. They're also forecasting more rapid revenue growth than the wider market. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Kuuhubb after today.
That said, this broker might have good reason to be negative on Kuuhubb, given a short cash runway. For more information, you can click here to discover this and the 1 other flag we've identified.
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