These Analysts Think TILT Holdings Inc.'s (CSE:TILT) Earnings Are Under Threat

Today is shaping up negative for TILT Holdings Inc. (CSE:TILT) shareholders, with the analysts delivering a substantial negative revision to next year's forecasts. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business.

After the downgrade, the twin analysts covering TILT Holdings are now predicting revenues of US$209m in 2021. If met, this would reflect a substantial 35% improvement in sales compared to the last 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 90% to US$0.015. Previously, the analysts had been modelling revenues of US$270m and earnings per share (EPS) of US$0.02 in 2021. There looks to have been a major change in sentiment regarding TILT Holdings' prospects, with a sizeable cut to revenues and the analysts now forecasting a loss instead of a profit.

See our latest analysis for TILT Holdings

The consensus price target lifted 29% to US$0.98, clearly signalling that the weaker revenue and EPS outlook are not expected to weigh on the stock over the longer term. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values TILT Holdings at US$1.00 per share, while the most bearish prices it at US$1.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that the analysts have a clear view on its prospects.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The analysts are definitely expecting TILT Holdings' growth to accelerate, with the forecast 35% growth ranking favourably alongside historical growth of 26% per annum over the past year. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 32% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that TILT Holdings is expected to grow at about the same rate as the wider industry.

The Bottom Line

The biggest low-light for us was that the forecasts for TILT Holdings dropped from profits to a loss next year. There was also a drop in their revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider market. The rising price target is a puzzle, but still - with a serious cut to next year's outlook, we wouldn't be surprised if investors were a bit wary of TILT Holdings.

So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with TILT Holdings, including a short cash runway. For more information, you can click here to discover this and the 2 other concerns we've identified.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

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