Verano Holdings Corp. (CSE:VRNO) Second-Quarter Results Just Came Out: Here's What Analysts Are Forecasting For This Year

It's been a mediocre week for Verano Holdings Corp. (CSE:VRNO) shareholders, with the stock dropping 13% to CA$17.10 in the week since its latest second-quarter results. Overall the results were a little better than the analysts were expecting, with revenues beating forecasts by 2.3%to hit US$199m. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

View our latest analysis for Verano Holdings

After the latest results, the seven analysts covering Verano Holdings are now predicting revenues of US$842.7m in 2021. If met, this would reflect a major 84% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to leap 48% to US$0.81. In the lead-up to this report, the analysts had been modelling revenues of US$846.8m and earnings per share (EPS) of US$0.96 in 2021. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a substantial drop in EPS estimates.

It might be a surprise to learn that the consensus price target was broadly unchanged at CA$42.08, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Verano Holdings analyst has a price target of CA$47.00 per share, while the most pessimistic values it at CA$35.00. This is a very narrow spread of estimates, implying either that Verano Holdings is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Verano Holdings' past performance and to peers in the same industry. The period to the end of 2021 brings more of the same, according to the analysts, with revenue forecast to display 239% growth on an annualised basis. That is in line with its 225% annual growth over the past year. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 34% annually. So it's pretty clear that Verano Holdings is forecast to grow substantially faster than its industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Verano Holdings. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at CA$42.08, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on Verano Holdings. Long-term earnings power is much more important than next year's profits. We have forecasts for Verano Holdings going out to 2022, and you can see them free on our platform here.

You still need to take note of risks, for example - Verano Holdings has 2 warning signs we think you should be aware of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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