Cresco Labs Inc. (CSE:CL) Released Earnings Last Week And Analysts Lifted Their Price Target To CA$5.41

The investors in Cresco Labs Inc.'s (CSE:CL) will be rubbing their hands together with glee today, after the share price leapt 21% to CA$2.57 in the week following its yearly results. It was an okay report, and revenues came in at US$771m, approximately in line with analyst estimates leading up to the results announcement. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

See our latest analysis for Cresco Labs

Following the recent earnings report, the consensus from twelve analysts covering Cresco Labs is for revenues of US$744.3m in 2024. This implies a discernible 3.4% decline in revenue compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 88% to US$0.061. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$752.9m and losses of US$0.071 per share in 2024. Although the revenue estimates have not really changed Cresco Labs'future looks a little different to the past, with a notable improvement in the loss per share forecasts in particular.

The average price target rose 7.4% to CA$5.41, with the analysts signalling that the forecast reduction in losses would be a positive for the stock's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Cresco Labs, with the most bullish analyst valuing it at CA$13.06 and the most bearish at CA$3.26 per share. 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. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

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. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 3.4% by the end of 2024. This indicates a significant reduction from annual growth of 37% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 9.8% annually for the foreseeable future. It's pretty clear that Cresco Labs' revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

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. We have estimates - from multiple Cresco Labs analysts - going out to 2026, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 3 warning signs for Cresco Labs 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.