Yahoo Finance Analysts Are More Bearish On OrganiGram Holdings Inc. (TSE:OGI) Than They Used To Be
Today is shaping up negative for OrganiGram Holdings Inc. (TSE:OGI) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting analysts have soured majorly on the business.
Following the latest downgrade, OrganiGram Holdings' 14 analysts currently expect revenues in 2021 to be CA$73m, approximately in line with the last 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 64% to CA$0.41. Yet before this consensus update, the analysts had been forecasting revenues of CA$91m and losses of CA$0.23 per share in 2021. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to this year's revenue estimates, while at the same time increasing their loss per share forecasts.
Check out our latest analysis for OrganiGram Holdings
The consensus price target fell 6.9% to CA$3.91, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on OrganiGram Holdings, with the most bullish analyst valuing it at CA$6.15 and the most bearish at CA$2.50 per share. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.
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. We would highlight that OrganiGram Holdings' revenue growth is expected to slow, with the forecast 0.8% annualised growth rate until the end of 2021 being well below the historical 56% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 30% per year. Factoring in the forecast slowdown in growth, it seems obvious that OrganiGram Holdings is also expected to grow slower than other industry participants.
The Bottom Line
The most important thing to note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at OrganiGram Holdings. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that OrganiGram Holdings' revenues are expected to grow slower than the wider market. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.
That said, the analysts might have good reason to be negative on OrganiGram Holdings, given major dilution from new stock issuance in the past year. Learn more, and discover the 1 other risk we've identified, for free on our platform here.
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.
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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