Revenue Downgrade: Here's What Analysts Forecast For Planet 13 Holdings Inc. (CSE:PLTH)

Market forces rained on the parade of Planet 13 Holdings Inc. (CSE:PLTH) shareholders today, when the analysts downgraded their forecasts for next year. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

After the downgrade, the three analysts covering Planet 13 Holdings are now predicting revenues of US$152m in 2022. If met, this would reflect a substantial 38% improvement in sales compared to the last 12 months. Before the latest update, the analysts were foreseeing US$172m of revenue in 2022. It looks like forecasts have become a fair bit less optimistic on Planet 13 Holdings, given the substantial drop in revenue estimates.

Check out our latest analysis for Planet 13 Holdings

The consensus price target fell 13% to US$5.92, with the analysts clearly less optimistic about Planet 13 Holdings' valuation following this update. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Planet 13 Holdings analyst has a price target of US$10.00 per share, while the most pessimistic values it at US$5.00. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's pretty clear that there is an expectation that Planet 13 Holdings' revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 30% growth on an annualised basis. This is compared to a historical growth rate of 49% over the past five years. Compare this to the 148 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 30% per year. So it's pretty clear that, while Planet 13 Holdings' revenue growth is expected to slow, it's expected to grow roughly in line with the industry.

The Bottom Line

The clear low-light was that analysts slashing their revenue forecasts for Planet 13 Holdings next year. They're also forecasting for revenues to grow at about the same rate as companies in the wider market. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. Given the stark change in sentiment, we'd understand if investors became more cautious on Planet 13 Holdings after today.

After a downgrade like this, it's pretty clear that previous forecasts were too optimistic. What's more, we've spotted several possible issues with Planet 13 Holdings' business, like dilutive stock issuance over the past year. Learn more, and discover the 3 other concerns we've identified, for free on our platform here.

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.

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.

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