Industry Analysts Just Upgraded Their Auxly Cannabis Group Inc. (TSE:XLY) Revenue Forecasts By 11%

Simply Wall St
·3 min read

Celebrations may be in order for Auxly Cannabis Group Inc. (TSE:XLY) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. The consensus estimated revenue numbers rose, with their view now clearly much more bullish on the company's business prospects. The market seems to be pricing in some improvement in the business too, with the stock up 8.7% over the past week, closing at CA$0.25. It will be interesting to see if this latest upgrade is enough to kickstart further buying interest in the stock.

After the upgrade, the four analysts covering Auxly Cannabis Group are now predicting revenues of CA$75m in 2021. If met, this would reflect a meaningful 16% improvement in sales compared to the last 12 months. Before the latest update, the analysts were foreseeing CA$68m of revenue in 2021. The consensus has definitely become more optimistic, showing a nice gain to revenue forecasts.

Check out our latest analysis for Auxly Cannabis Group

earnings-and-revenue-growth
earnings-and-revenue-growth

Additionally, the consensus price target for Auxly Cannabis Group increased 8.1% to CA$0.50, showing a clear increase in optimism from the analysts involved. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Auxly Cannabis Group analyst has a price target of CA$0.75 per share, while the most pessimistic values it at CA$0.40. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Auxly Cannabis Group's revenue growth is expected to slow, with the forecast 35% annualised growth rate until the end of 2021 being well below the historical 82% p.a. growth over the last five years. Compare this to the 154 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 32% per year. Factoring in the forecast slowdown in growth, it looks like Auxly Cannabis Group is forecast to grow at about the same rate as the wider industry.

The Bottom Line

The most important thing to take away from this upgrade is that analysts lifted their revenue estimates for this year. The analysts also expect revenues to grow approximately in line with the wider market. There was also an increase in the price target, suggesting that there is more optimism baked into the forecasts than there was previously. Seeing the dramatic upgrade to this year's forecasts, it might be time to take another look at Auxly Cannabis Group.

Of course, there's always more to the story. At least one of Auxly Cannabis Group's four analysts has provided estimates out to 2023, which can be seen 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 upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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