OrganiGram Holdings Inc. (TSE:OGI) Consensus Forecasts Have Become A Little Darker Since Its Latest Report
OrganiGram Holdings Inc. (TSE:OGI) missed earnings with its latest third-quarter results, disappointing overly-optimistic forecasters. Unfortunately, OrganiGram Holdings delivered a serious earnings miss. Revenues of CA$18m were 13% below expectations, and statutory losses ballooned 1,363% to CA$0.51 per share. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. 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 OrganiGram Holdings
After the latest results, the 15 analysts covering OrganiGram Holdings are now predicting revenues of CA$133.5m in 2021. If met, this would reflect a huge 62% improvement in sales compared to the last 12 months. Statutory losses are forecast to balloon 93% to CA$0.053 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of CA$160.2m and earnings per share (EPS) of CA$0.054 in 2021. There looks to have been a major change in sentiment regarding OrganiGram Holdings' prospects following the latest results, with a real cut to revenues and the analysts now forecasting a loss instead of a profit.
The average price target fell 23% to CA$3.29, implicitly signalling that lower earnings per share are a leading indicator for OrganiGram Holdings' valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values OrganiGram Holdings at CA$5.00 per share, while the most bearish prices it at CA$1.75. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the OrganiGram Holdings' past performance and to peers in the same industry. We can infer from the latest estimates that forecasts expect a continuation of OrganiGram Holdings'historical trends, as next year's 62% revenue growth is roughly in line with 69% annual revenue growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 33% per year. So although OrganiGram Holdings is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.
The Bottom Line
The biggest low-light for us was that the forecasts for OrganiGram Holdings dropped from profits to a loss next year. They also downgraded their revenue estimates, although industry data suggests that OrganiGram Holdings' revenues are expected to grow faster than the wider industry. 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.
With that in mind, we wouldn't be too quick to come to a conclusion on OrganiGram Holdings. Long-term earnings power is much more important than next year's profits. We have forecasts for OrganiGram Holdings going out to 2024, and you can see them free on our platform here.
However, before you get too enthused, we've discovered 2 warning signs for OrganiGram Holdings that you should be aware of.
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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