Analysts Have Been Trimming Their Canopy Growth Corporation (TSE:WEED) Price Target After Its Latest Report

It's been a mediocre week for Canopy Growth Corporation (TSE:WEED) shareholders, with the stock dropping 18% to CA$5.10 in the week since its latest third-quarter results. Revenues of CA$90m crushed expectations, although expenses also blew out, with the company reporting a statutory loss per share of CA$2.62, 424% bigger than analysts expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Check out our latest analysis for Canopy Growth

Taking into account the latest results, the current consensus, from the nine analysts covering Canopy Growth, is for revenues of CA$299.4m in 2025. This implies an uncomfortable 17% reduction in Canopy Growth's revenue over the past 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 89% to CA$1.42. Yet prior to the latest earnings, the analysts had been forecasting revenues of CA$325.9m and losses of CA$1.59 per share in 2025. While the revenue estimates fell, sentiment seems to have improved, with the analysts making a notable improvement in losses per share in particular.

The analysts have cut their price target 17% to CA$7.29per share, suggesting that the declining revenue was a more crucial indicator than the forecast reduction in losses.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that revenue is expected to reverse, with a forecast 14% annualised decline to the end of 2025. That is a notable change from historical growth of 6.2% 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 10% annually for the foreseeable future. It's pretty clear that Canopy Growth's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Canopy Growth's future valuation.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Canopy Growth going out to 2026, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 4 warning signs for Canopy Growth (1 is a bit unpleasant!) that you need to be mindful 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.