Hexo: Canaccord Lowers Price Target Following Poor Execution

On Monday, Hexo Corp (TSX: HEXO) (NYSE: HEXO) reported their fiscal third-quarter estimates which missed consensus estimates significantly. HEXO reported revenues of $22.7 million, a measly 2% increase year over year and a ~31% decrease quarter over quarter. Gross profit came in at $4.38 million, and had the same fate as revenue, cratering 61.3% quarter over quarter.

Many analysts have come out and lowered their targets and ratings on the company. ATB, Alliance, CIBC, Stifel-GMP, and Canaccord lowered their 12-month price targets bringing the consensus 12-month price target to C$8.43, down from C$9.47 from before the release. The company has 12 analysts covering the stock with three analysts having buy ratings, eight analysts have hold ratings and one analyst has a strong sell rating. The street high comes from Alliance Global with a C$12 price target while the lowest comes in at C$5.97.

In Canaccord’s note, they lowered their 12-month price target to C$7.00 from C$9.00 and reiterated their hold rating on the name. Matt Bottomley says that this quarter “represented a step back with respect to the company’s execution in its core legacy business,” even though the recent M&A puts the company in a top-three market share position.

For this quarter, the company reported revenues $10 million lower than Canaccord’s estimates. This is concerning to Bottomley due to the company seeing sales in its core market drop by $5.2 million and the company having issues with its production of hash products during the quarter. BUT the company boasted a leading market share of 46% in beverages!

Bottomley warns that the volatility in LP’s revenue might continue as “the saturated Canadian cannabis landscape continues to evolve,” and believes that this is a very high risk to the LP’s fundamentals.

Below you can see Canaccord’s updated full-year 2021 and 2022 estimates.


Information for this briefing was found via Sedar and Refinitiv. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

Leave a Reply

Video Articles

Endeavour Mining Q1 Earnings: Cash Flow Is King

G Mining Oko West Feasibility: Move Fast, Break.. Nothing?

New Gold Q1 Earnings: What’s Behind The Market’s Surprising Reaction?

Recommended

Giant Mining Encounters Native Copper As Hole MHB-34 Hits 563 Metres Depth

Verses Hits Commercialization Stage With Genius AI Platform

Related News

Curaleaf: Haywood Predicts Slower Growth Into 2022

Curaleaf Holdings (CSE: CURA) announced that they would be reporting their third quarter financial results...

Sunday, October 31, 2021, 02:40:00 PM

WeedMD: Canaccord Reiterates Price Target After Earnings

WeedMD (TSXV: WMD) reported their first-quarter financials of 2021 on June 29th. The company reported...

Thursday, July 1, 2021, 03:09:00 PM

Curaleaf Sees Consensus Estimates Stay Flat After Q1 Results

Curaleaf Holdings (CSE: CURA) reported its first-quarter results on May 10th, beating the consensus estimates...

Saturday, May 15, 2021, 04:24:00 PM

Organigram: Haywood Raises Estimates Betting On Increased Market Share

On January 11th, Organigram Holdings (TSX: OGI) issued its second fiscal quarter earnings for 2022....

Saturday, January 15, 2022, 11:09:00 AM

Hexo Pushes Out Burwash As CFO, Appoints Trent MacDonald

The revolving door that is the chief financial officer position at Hexo Corp (TSX: HEXO)...

Monday, September 14, 2020, 05:34:20 PM