As of Tuesday, Charlotte’s Web Holdings (CWBHF) (CWEB) was trading at 18.15 Canadian dollars, which implies a fall of 37.0% since its second-quarter earnings on August 14. During the quarter, the company missed analysts’ top-line and bottom-line estimates. The lower-than-expected second-quarter performance and weakness in the cannabis sector dragged the stock down. Now, let’s look at analysts’ recommendations.
Analysts’ target price for Charlotte’s Web
In the last 12 months, there has been an increase in analysts’ coverage on Charlotte’s Web. As of Tuesday, eight analysts cover the stock compared to just one analyst in October 2018. In the above graph, you can see that the company’s consensus target price has gradually increased in the last 12 months. As of Tuesday, analysts’ consensus target price was 31.95 Canadian dollars, which implies a return potential of 76.0%. Since Charlotte’s Web reported its second-quarter earnings, two analysts have lowered their target price, while one analyst increased its target price.
On October 12, PI Financial lowered its target price for 15 cannabis companies including Charlotte’s Web. The Canadian investment company cut its target price for the company from 30 Canadian dollars to 28 Canadian dollars. On August 15, Benchmark lowered its target price from $25 to $22. Meanwhile, Eight Capital increased its target price from 25 Canadian dollars to 31 Canadian dollars.
On Tuesday, MedMen Enterprises (MMEN) (MMNFF), Tilray (TLRY), and Canopy Growth (WEED) (CGC) were trading at a discount of 191.0%, 92.9%, and 77.1%, from their respective target prices.
Despite reporting lower-than-expected second-quarter revenue, analysts look bullish on Charlotte’s Web. As of Tuesday, two of the eight analysts that cover the stock recommend a “strong-buy” rating, while six analysts recommend a “buy” rating. None of the analysts recommend a “hold” or “sell” rating. Analysts’ ratings haven’t changed since Charlotte’s Web reported its second-quarter earnings.
Let’s look at analysts’ recommendations for the company’s peers:
- Among the eight analysts that follow MedMen Enterprises, five have recommend a “buy.” For more analysts’ opinions on MedMen, read MedMen: Analysts’ Lower Target Price and Ratings.
- Analysts favor a “hold” rating for Tilray. Among the 18 analysts that follow Tilray, 11 recommend a “hold.”
- For Canopy Growth, 11 of the 21 analysts that cover the stock recommend a “buy” rating. Read Canopy Growth: Analysts Provide Target Price and Ratings to learn more.
YTD stock performance
Despite the recent fall, Charlotte’s Web has returned 19.6% this year as of Tuesday. The company beat its peers and cannabis ETFs this year. MedMen Enterprises, Tilray, and Canopy Growth have lost 61.6%, 68.6%, and 27.5% of their stock value YTD, respectively. Meanwhile, the ETFMG Alternative Harvest ETF (MJ) and the Horizons Marijuana Life Sciences Index ETF (HMMJ) have fallen 21.3% and 24.1% during the same period, respectively.
Last week, Andrews & Springer announced an investigation into Tilray’s possible wrongdoing. Read Cannabis Scandal Radar: Is Tilray Next? to learn more. Canopy Growth’s stock price fell due to the recent downgrades by Jefferies and Bank of America and weak first-quarter earnings.
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