Market forces rained on the parade of Decibel Cannabis Company Inc. (CVE:DB) shareholders today, when the analysts downgraded their forecasts for this year. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.
Following the downgrade, the most recent consensus for Decibel Cannabis from its twin analysts is for revenues of CA$104m in 2025 which, if met, would be a solid 12% increase on its sales over the past 12 months. Statutory earnings per share are presumed to drop to approximately break-even in the same period. Previously, the analysts had been modelling revenues of CA$121m and earnings per share (EPS) of CA$0.02 in 2025. It looks like analyst sentiment has declined substantially, with a substantial drop in revenue estimates and a earnings per share numbers as well.
Check out our latest analysis for Decibel Cannabis
The consensus price target fell 16% to CA$0.23, with the analysts clearly less optimistic about Decibel Cannabis’ valuation following this update.
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 Decibel Cannabis’ revenue growth is expected to slow, with the forecast 17% annualised growth rate until the end of 2025 being well below the historical 30% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 5.6% per year. So it’s pretty clear that, while Decibel Cannabis’ revenue growth is expected to slow, it’s still expected to grow faster than the industry itself.
The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of Decibel Cannabis’ future valuation. Given the stark change in sentiment, we’d understand if investors became more cautious on Decibel Cannabis after today.
