Yahoo Finance What You Need To Know About The urban-gro, Inc. (NASDAQ:UGRO) Analyst Downgrade Today
The latest analyst coverage could presage a bad day for urban-gro, Inc. (NASDAQ:UGRO), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. 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 urban-gro from its four analysts is for revenues of US$82m in 2024 which, if met, would be a meaningful 14% increase on its sales over the past 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 71% to US$0.44. However, before this estimates update, the consensus had been expecting revenues of US$113m and US$0.41 per share in losses. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also expecting losses per share to increase.
View our latest analysis for urban-gro
The consensus price target fell 17% to US$4.74, implicitly signalling that lower earnings per share are a leading indicator for urban-gro's valuation.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that urban-gro's revenue growth is expected to slow, with the forecast 14% annualised growth rate until the end of 2024 being well below the historical 29% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 3.4% annually. Even after the forecast slowdown in growth, it seems obvious that urban-gro is also expected to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that analysts increased their loss per share estimates for this year. 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 urban-gro's future valuation. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of urban-gro going forwards.
So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with urban-gro, including dilutive stock issuance over the past year. For more information, you can click here to discover this and the 3 other warning signs we've identified.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
