Yahoo Finance Need To Know: The Consensus Just Cut Its WeedMD Inc. (CVE:WMD) Estimates For 2020
The latest analyst coverage could presage a bad day for WeedMD Inc. (CVE:WMD), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. 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 twin analysts covering WeedMD are now predicting revenues of CA$40m in 2020. If met, this would reflect a sizeable 46% improvement in sales compared to the last 12 months. Before the latest update, the analysts were foreseeing CA$46m of revenue in 2020. The consensus view seems to have become more pessimistic on WeedMD, noting the measurable cut to revenue estimates in this update.
Check out our latest analysis for WeedMD
Notably, the analysts have cut their price target 21% to CA$0.68, suggesting concerns around WeedMD's 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. The most optimistic WeedMD analyst has a price target of CA$0.85 per share, while the most pessimistic values it at CA$0.50. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await WeedMD shareholders.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's pretty clear that there is an expectation that WeedMD's revenue growth will slow down substantially, with revenues next year expected to grow 46%, compared to a historical growth rate of 90% over the past three years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 32% next year. So it's pretty clear that, while WeedMD's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.
The Bottom Line
The clear low-light was that analysts slashing their revenue forecasts for WeedMD this year. The analysts also expect revenues to grow faster than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of WeedMD's future valuation. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of WeedMD going forwards.
So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with WeedMD, including major dilution from new stock issuance in the past year. For more information, you can click here to discover this and the 4 other concerns we've identified.
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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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