Shares of Charlotte's Web Holdings Inc CWBHF are down 20% over the last three months and while regulatory outlook seems to be improving, near-term concerns remain.
Cantor Fitzgerald analyst Pablo Zuanic maintained a Neutral rating for Charlotte's Web, while reducing the price target from $5.85 to $5.25.
The Charlotte's Web Thesis
Concerns around the company’s near-term prospects stem from a potential second-quarter miss and the proforma guidance being set below consensus expectations, Zuanic said.
He expects Charlotte's Web to report its second-quarter sales around 10% below the current consensus estimate.
Although management is unlikely to trim fiscal 2020 guidance for the base business this early, expectations from the Abacus acquisition seems unrealistic at $25 million, the analyst added.
Despite the near-term concerns, Zuanic believes Charlotte's Web is “a much stronger company” after the acquisition of Abacus, given its market penetration in CBD (cannabidiol) topicals and as regulations become clearer.
While the FDA seems to be moving in the right direction, its draft of guidelines submitted to the White House has been termed as “not economically significant” and has no legal deadline, suggesting that the document may be missing “the key features sought by the industry,” the analyst wrote.
CWBHF Price Action: Shares of Charlotte's Web were trading around $3.76 at the time of publication.
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