Cannabis Analyst: Charlotte's Web Model Update, Adjusted Estimates, Lower Price Target

The Analyst:

In a recent analyst note, Pablo Zuanic from Cantor Fitzgerald remained Neutral and lowered the 12-month price target price of Charlotte's Web Holdings Inc. (OTC: CWBHF) to $1.50 from $3.45, based on CBD sectoral derating and reduced sales estimates.

The Thesis:

Zuanic explained that the stock is down 44% over the last 3 months and calculates an enterprise value of $175 Million. Cantor’s sales estimates for 2022 remain 8% below FactSet consensus, but in line with the outlook range of 10-15% growth for the period assuming no regulatory changes.

Zuanic said he prefers to stay Neutral until there is more evidence available on the “ramp-up in distribution gains and improved EBITDA trends.”

“As explained in the last call, consumers are switching to more affordable formats (gummies vs. tinctures), so while industry volumes have grown, sales have not. We take 1.5x sales on our CY23 sales estimates to value the stock (this is near the current multiple for 2022), which is not excessively conservative given MSOs trade at 3.2x,” Zuanic clarified.

“Based on the ramp in sector deal-making, one could think the CBD market is thriving or set for significant acceleration. We have a more bearish view top-down: we think …

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