Vintage Wine Estates Inc shares have tumbled and the stock has been downgraded to ‘Sell’ by Canaccord Genuity (TSX:CF, LSE:CF) analysts after the wine producer released a series of announcements on Wednesday evening, including changes to its management team and plans to improve its operations.
The company's shares had fallen 17.6% at mid-morning on Thursday, trading at about US$2.30.
In a note to clients, Canaccord’s analysts wrote that the appointment of an interim CEO, another set of restatements to financials, softer-than-expected preliminary fiscal 2Q 2023 results, and the complete withdrawal of fiscal 2023 guidance had compelled them to move their rating on the stock to ‘Sell’ from ‘Hold.’
READ: Wine investment might cork in 2023 suggests new report
The analysts also reduced their price target from US$2 to US$1.
“At this juncture, we have more questions than answers, and have considerably lowered our F2023 and F2024 estimates,” the analysts wrote.
“We hope management can provide some degree of clarity into the state of the business and its near-term progression in mid-March when the company plans to release its 2Q/F23 earnings results.”
On Vintage Wine Estates’ plans to improve its operations, the analysts noted that management’s focus will shift toward paying down debt and achieving profitable growth by increasing freight recovery charges in the B2B segment and reducing marketing spend, among other initiatives.
They wrote that these changes were expected to lead to $10 million in improved pricing/lower costs, which should phase in over the course of 1H/F23.
Contact the author at emily.jarvie@proactiveinvestors.com
Follow her on Twitter @emilyjjarvie