Earnings Release: Here's Why Analysts Cut Their TerrAscend Corp. (TSE:TSND) Price Target To CA$1.75

TerrAscend Corp. (TSE:TSND) shareholders are probably feeling a little disappointed, since its shares fell 4.0% to CA$0.95 in the week after its latest quarterly results. It was a pretty bad result overall; while revenues were in line with expectations at US$65m, statutory losses exploded to US$0.084 per share. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

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Taking into account the latest results, the current consensus, from the four analysts covering TerrAscend, is for revenues of US$271.1m in 2026. This implies a discernible 6.7% reduction in TerrAscend's revenue over the past 12 months. Losses are predicted to fall substantially, shrinking 74% to US$0.056. Before this earnings announcement, the analysts had been modelling revenues of US$279.5m and losses of US$0.051 per share in 2026. So it's pretty clear the analysts have mixed opinions on TerrAscend after this update; revenues were downgraded and per-share losses expected to increase.

View our latest analysis for TerrAscend

The consensus price target fell 11% to CA$1.75, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. 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. There are some variant perceptions on TerrAscend, with the most bullish analyst valuing it at CA$2.00 and the most bearish at CA$1.25 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that revenue is expected to reverse, with a forecast 5.4% annualised decline to the end of 2026. That is a notable change from historical growth of 15% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 12% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - TerrAscend is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that the analysts increased their loss per share estimates for next year. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple TerrAscend analysts - going out to 2027, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 2 warning signs for TerrAscend (1 is concerning) 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.