Downgrade: Here's How Analysts See Aurora Cannabis Inc. (TSE:ACB) Performing In The Near Term

One thing we could say about the analysts on Aurora Cannabis Inc. (TSE:ACB) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business. Bidders are definitely seeing a different story, with the stock price of CA$2.05 reflecting a 17% rise in the past week. With such a sharp increase, it seems brokers may have seen something that is not yet being priced in by the wider market.

Following the latest downgrade, Aurora Cannabis' seven analysts currently expect revenues in 2023 to be CA$208m, approximately in line with the last 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 92% to CA$0.44. However, before this estimates update, the consensus had been expecting revenues of CA$243m and CA$0.38 per share in losses. 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.

View our latest analysis for Aurora Cannabis

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that sales are expected to reverse, with a forecast 1.3% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 22% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 19% annually for the foreseeable future. It's pretty clear that Aurora Cannabis' revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at Aurora Cannabis. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. After a cut like that, investors could be forgiven for thinking analysts are a lot more bearish on Aurora Cannabis, and a few readers might choose to steer clear of the stock.

There might be good reason for analyst bearishness towards Aurora Cannabis, like major dilution from new stock issuance in the past year. Learn more, and discover the 2 other warning signs we've identified, for free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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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.