Earnings Update: Here's Why Analysts Just Lifted Their Planet 13 Holdings Inc. (CSE:PLTH) Price Target To US$5.56

Shareholders of Planet 13 Holdings Inc. (CSE:PLTH) will be pleased this week, given that the stock price is up 18% to CA$5.69 following its latest quarterly results. Results were overall in line with expectations, with the company breaking even at the statutory earnings per share (EPS) level on US$23m in revenue. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Check out our latest analysis for Planet 13 Holdings

Following the latest results, Planet 13 Holdings' three analysts are now forecasting revenues of US$141.9m in 2021. This would be a substantial 112% improvement in sales compared to the last 12 months. Planet 13 Holdings is also expected to turn profitable, with statutory earnings of US$0.10 per share. In the lead-up to this report, the analysts had been modelling revenues of US$138.8m and earnings per share (EPS) of US$0.08 in 2021. There's been a pretty noticeable increase in sentiment, with the analysts upgrading revenues and making a very substantial lift in earnings per share in particular.

It will come as no surprise to learn that the analysts have increased their price target for Planet 13 Holdings 23% to US$5.56on the back of these upgrades. 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. There are some variant perceptions on Planet 13 Holdings, with the most bullish analyst valuing it at US$7.98 and the most bearish at US$6.49 per share. This is a very narrow spread of estimates, implying either that Planet 13 Holdings is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting Planet 13 Holdings' growth to accelerate, with the forecast 112% growth ranking favourably alongside historical growth of 66% per annum over the past three years. Compare this with other companies in the same industry, which are forecast to grow their revenue 33% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that Planet 13 Holdings is expected to grow much faster than its industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Planet 13 Holdings' earnings potential next year. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

With that in mind, we wouldn't be too quick to come to a conclusion on Planet 13 Holdings. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Planet 13 Holdings going out to 2022, and you can see them free on our platform here..

Plus, you should also learn about the 2 warning signs we've spotted with Planet 13 Holdings .

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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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