Sundial Growers Inc (NASDAQ: SNDL) has surged 439% over the past month of trading. Other industry competitors Tilray (NASDAQ: TLRY) and Aurora Cannabis (TSE: ACB) have also seen impressive gains after a shift in sentiment on Wallstreet. SNDL’s strong stock performance is attributed to optimism surrounding possible changes in legalisation of cannabis in the United States. Although only speculation, this has been enough to drive strong gains within the industry. However, the additional gains have brought extreme volatility to the cannabis market.This article will breakdown everything you need to know about the SNDL stock forecast for 2022 and beyond.
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What are analysts saying about Sundial Growers stock?
Firstly, the general consensus across the board of four Wallstreet analysts is neutral. Three of the analysts have listed a Hold rating whilst another listed a Sell. The strong momentum and price activity could see changes in the 12 month price targets from analysts. However, investors are focused on the industries prospects which analysts are turning bullish on.
“[With] room for equity valuations to continue moving higher, we remain bullish on US cannabis and believe 2021 will be a pivotal year for the industry…We also look for a continuation of state-led legalization initiatives,”Cormark Securities’ Jesse Pytlak noted – according to a Yahoo Finance article
Furthermore, analysts are predicting revenue for 2021 to reach USD $64.15 million or CAD $81.31 million according to Yahoo Finance. This suggests an increase YOY of 17%. Furthermore, the EPS is also expected to improve, with average estimates at -0.08 for 2021. This is an improvement from -0.42 (forecasted) for the fiscal year of 2020.
Whats next for SNDL stock in 2021/22?
Firstly, Sundial Growers has sizeably reduced their debt and boosted its Cash position to roughly $615 million. In addition, the positioning places SNDL in a strong financial position moving into 2021/22. The company is not yet profitable however investors believe the improvements in operational costings pushes the company closer to profitability.
“While our third quarter revenue decreased, we are pleased with the demonstrated improvement in operating discipline, successful cost optimization initiatives and a material reduction of our debt. Following the announcement of our financial restructuring in June of this year, we have accelerated improvements in our operating practices targeting a sustainable cost structure and a simplified business model that will better enable us to focus on delighting consumers.”said Zach George, Sundial’s CEO. Q3 Earnings statement
It is important to note the bearish arguments regarding SNDL stock as we move into 2021. The wave of speculation creates extreme volatility within the cannabis market. If history can teach us anything, the strong cannabis hype in 2019 was short lived and most industry related companies plummeted. Therefore, its important for investors to understand the extreme volatility of the cannabis market and price this into your own risk strategy.
We remind our viewers that this article is not financial advice but rather investment commentary from extensive research.
In conclusion, SNDL stock is receiving extensive support from investors as the US gears up for potential changes in legislation surrounding cannabis. The bullish sweep across the cannabis industry has seen SNDL push close to its 52 week highs. Analysts positioning on SNDL stock is neutral however the revenue forecasts provide a positive to investors. The push towards profitability will be a key aspect investors will be watching through 2021/22 fiscal year.
Written by Tyger Fitzpatrick at Youth Investment Group.
The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.
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