OUR 9TH YEAR OF PROVIDING PROPRIETARY CAPITAL MARKETS INTELLIGENCE ON THE CANNABIS / HEMP / PSYCHEDELIC SECTORS
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Chart of the Week
Chart of the Week
The Viridian Capital Chart of the Week highlights key investment, valuation and M&A trends taken from that week’s Deal Tracker that we believe are impactful for investors, companies and acquirers.
Week ended 06/23/2023
Viridian Capital Chart of the Week: 2nd Qtr Revenue Estimates are Conservative but 2nd Half Estimates are Still Aggressive
- We have commented previously that 2023 revenue estimates look reasonable. However, looking more closely, it appears that sell-side analysts have cut their estimates aggressively for the second quarter but are holding on to more optimism for the second half than is warranted. Barring an exceptional start for the Maryland market, we will likely see further downward revisions to H2 2023 estimates.
- The chart shows analyst estimates of growth rates for the second quarter vs. the first quarter and for the second half vs. the first half of 2022 and 2023.
- The light orange bars show the percentage growth of second quarter 2022 revenues compared to 1st quarter 2022 revenues. The increase reflects the regular snapback from a seasonally weak Q1. TerrAscend (TER: CSE) and Ascend (AAWH: CSE) experienced higher growth, mainly from the startup of the New Jersey market. The aggregate growth for the group was 6.2%.
- The darker orange bars depict the significantly lower estimated 2023 Q2 vs. Q1 revenue growth. Note that every company on the chart has lower growth from Q1 to Q2 2023 than Q1 to Q2 2022 except AYR (AYR.A: CSE), where analysts are projecting more robust results in Florida and New Jersey.
- Estimated 2023 second-quarter revenue growth for the group of only 1.0% compared to Q1 is quite conservative and arguably below the average seasonal effect.
- The Green bars, showing 2022 and 2023 H1 vs. H2 growth rates, tell a different story. The light green bars are the 2022 H1 to H2 growth rates, while the darker green bars are the H1 to H2 growth rates for 2023.
- The group’s 2023 H1 to H2 growth is 5.6% vs. 4.1% for 2022, and 5 of the 11 companies show higher relative increases than in 2022.
- The relatively large projected growth between H1 and H2 2023 seems inconsistent with the conservative projections for Q2, particularly given that Maryland is the only new rec market that will impact 2023 H2.
