Charlotte's Web Holdings, Inc. (TSE:CWEB) Analysts Just Cut Their EPS Forecasts Substantially

TSE:CWEB) shareholders, with the analysts delivering a substantial negative revision to this year’s forecasts. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.” data-reactid=”28″>Today is shaping up negative for Charlotte’s Web Holdings, Inc. (TSE:CWEB) shareholders, with the analysts delivering a substantial negative revision to this year’s forecasts. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

After this downgrade, Charlotte’s Web Holdings’ eight analysts are now forecasting revenues of US$95m in 2020. This would be a reasonable 4.2% improvement in sales compared to the last 12 months. Losses are forecast to narrow 9.1% to US$0.39 per share. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$111m and losses of US$0.16 per share in 2020. 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.

See our latest analysis for Charlotte’s Web Holdings ” data-reactid=”30″> See our latest analysis for Charlotte’s Web Holdings

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There was no major change to the consensus price target of US$5.80, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts. 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 Charlotte’s Web Holdings analyst has a price target of US$9.35 per share, while the most pessimistic values it at US$3.90. 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 Charlotte’s Web Holdings’ past performance and to peers in the same industry. It’s pretty clear that there is an expectation that Charlotte’s Web Holdings’ revenue growth will slow down substantially, with revenues next year expected to grow 4.2%, compared to a historical growth rate of 5.8% over the past year. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 34% next year. Factoring in the forecast slowdown in growth, it seems obvious that Charlotte’s Web Holdings is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing to take away is that analysts increased their loss per share estimates for this year. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. We’re also surprised to see that the price target went unchanged. Still, deteriorating business conditions (assuming accurate forecasts!) can be a leading indicator for the stock price, so we wouldn’t blame investors for being more cautious on Charlotte’s Web Holdings after the downgrade.

see them free on our platform here.” data-reactid=”51″>Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Charlotte’s Web Holdings going out to 2023, and you can see them free on our platform here.

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