Yahoo Finance Analysts Have Been Trimming Their Auxly Cannabis Group Inc. (CVE:XLY) Price Target After Its Latest Report
It's been a good week for Auxly Cannabis Group Inc. (CVE:XLY) shareholders, because the company has just released its latest first-quarter results, and the shares gained 2.5% to CA$0.41. Revenues came in 24% better than analyst models expected, at CA$9.9m, although statutory losses ballooned 55% to CA$0.17, which is much worse than what was forecast. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
See our latest analysis for Auxly Cannabis Group
Taking into account the latest results, the most recent consensus for Auxly Cannabis Group from two analysts is for revenues of CA$40.6m in 2020 which, if met, would be a major 133% increase on its sales over the past 12 months. Prior to the latest earnings, the analysts were forecasting revenues of CA$47.9m in 2020, and did not provide an earnings per share estimate. It looks like the analysts have become a fair bit less optimistic on Auxly Cannabis Group's prospects, given the real cut to revenue estimates after the latest results.
Intriguingly,the analysts have cut their price target 20% to CA$0.55 showing a clear decline in sentiment around Auxly Cannabis Group's valuation.
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 Auxly Cannabis Group's rate of growth is expected to accelerate meaningfully, with the forecast 133% revenue growth noticeably faster than its historical growth of 77%p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 32% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Auxly Cannabis Group is expected to grow much faster than its industry.
The Bottom Line
The clear low-light was that the analysts cut their forecast revenue estimates for Auxly Cannabis Group next year. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will 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.
We have estimates for Auxly Cannabis Group from its two analysts out to 2022, 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 3 warning signs with Auxly Cannabis Group (at least 1 which makes us a bit uncomfortable) , and understanding them should be part of your investment process.
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