Cresco Labs Inc. (CSE:CL) Just Released Its Second-Quarter Results And Analysts Are Updating Their Estimates

Investors in Cresco Labs Inc. (CSE:CL) had a good week, as its shares rose 3.4% to close at CA$2.15 following the release of its second-quarter results. It was an okay report, and revenues came in at US$184m, approximately in line with analyst estimates leading up to the results announcement. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Cresco Labs after the latest results.

See our latest analysis for Cresco Labs

Taking into account the latest results, Cresco Labs' twelve analysts currently expect revenues in 2024 to be US$744.4m, approximately in line with the last 12 months. Losses are predicted to fall substantially, shrinking 80% to US$0.10. Before this earnings announcement, the analysts had been modelling revenues of US$745.0m and losses of US$0.067 per share in 2024. While this year's revenue estimates held steady, there was also a massive increase in loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.

As a result, there was no major change to the consensus price target of CA$6.09, with the analysts implicitly confirming that the business looks to be performing in line with expectations, despite higher forecast losses. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Cresco Labs analyst has a price target of CA$19.68 per share, while the most pessimistic values it at CA$3.75. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how analysts think this business will perform. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Cresco Labs' past performance and to peers in the same industry. We would highlight that Cresco Labs' revenue growth is expected to slow, with the forecast 1.0% annualised growth rate until the end of 2024 being well below the historical 27% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 11% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Cresco Labs.

The Bottom Line

The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Cresco Labs. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Cresco Labs' revenue is expected to perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Cresco Labs going out to 2026, and you can see them free on our platform here..

However, before you get too enthused, we've discovered 1 warning sign for Cresco Labs that you should be aware of.

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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.