The Flowr Corporation (CVE:FLWR) Analysts Are More Bearish Than They Used To Be

Today is shaping up negative for The Flowr Corporation (CVE:FLWR) shareholders, with the analysts delivering a substantial negative revision to next year's forecasts. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.

Following the downgrade, the most recent consensus for Flowr from its four analysts is for revenues of CA$53m in 2021 which, if met, would be a sizeable increase on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 78% to CA$0.098. Yet before this consensus update, the analysts had been forecasting revenues of CA$61m and losses of CA$0.028 per share in 2021. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to next year's revenue estimates, while at the same time increasing their loss per share forecasts.

View our latest analysis for Flowr

The consensus price target was broadly unchanged at CA$1.28, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation. 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 Flowr analyst has a price target of CA$2.00 per share, while the most pessimistic values it at CA$0.75. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Flowr's past performance and to peers in the same industry. For example, we noticed that Flowr's rate of growth is expected to accelerate meaningfully, with revenues forecast to grow manyfold, well above its historical decline of 33% a year over the past year. Compare this against analyst estimates for the wider industry, which suggest that (in aggregate) industry revenues are expected to grow 33% next year. Not only are Flowr's revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.

The Bottom Line

The most important thing to note from this downgrade is that the consensus increased its forecast losses next year, suggesting all may not be well at Flowr. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. We're also surprised to see that the price target went unchanged. Still, deteriorating business conditions (assuming accurate forecasts!) can be a leading indicator for the stock price, so we wouldn't blame investors for being more cautious on Flowr after the downgrade.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Flowr analysts - going out to 2024, and you can see them 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.

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