It's been a good week for Charlotte's Web Holdings, Inc. (TSE:CWEB) shareholders, because the company has just released its latest third-quarter results, and the shares gained 8.4% to CA$5.57. The results look positive overall; while revenues of US$25m were in line with analyst predictions, statutory losses were 7.4% smaller than expected, with Charlotte's Web Holdings losing US$0.05 per share. 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.
Taking into account the latest results, the current consensus from Charlotte's Web Holdings' nine analysts is for revenues of US$138.6m in 2021, which would reflect a huge 52% increase on its sales over the past 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 93% to US$0.033. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$140.7m and losses of US$0.12 per share in 2021. Although the revenue estimates have not really changed Charlotte's Web Holdings'future looks a little different to the past, with a the loss per share forecasts in particular.
There's been no major changes to the consensus price target of US$5.23, suggesting that reduced loss estimates are not enough to have a long-term positive impact on the stock's valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Charlotte's Web Holdings, with the most bullish analyst valuing it at US$10.00 and the most bearish at US$3.88 per share. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.
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. The analysts are definitely expecting Charlotte's Web Holdings' growth to accelerate, with the forecast 52% growth ranking favourably alongside historical growth of 28% per annum over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 31% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Charlotte's Web Holdings to grow faster than the wider industry.
The Bottom Line
The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
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. We have estimates - from multiple Charlotte's Web Holdings analysts - going out to 2023, and you can see them free on our platform here.
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with Charlotte's Web Holdings , and understanding these should be part of your investment process.
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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