Time To Worry? Analysts Just Downgraded Their Hydrofarm Holdings Group, Inc. (NASDAQ:HYFM) Outlook

The latest analyst coverage could presage a bad day for Hydrofarm Holdings Group, Inc. (NASDAQ:HYFM), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue estimates were cut sharply as the analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

Following the latest downgrade, the current consensus, from the three analysts covering Hydrofarm Holdings Group, is for revenues of US$193m in 2024, which would reflect an uneasy 15% reduction in Hydrofarm Holdings Group's sales over the past 12 months. Before the latest update, the analysts were foreseeing US$224m of revenue in 2024. The consensus view seems to have become more pessimistic on Hydrofarm Holdings Group, noting the measurable cut to revenue estimates in this update.

View our latest analysis for Hydrofarm Holdings Group

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 sales are expected to reverse, with a forecast 15% annualised revenue decline to the end of 2024. That is a notable change from historical growth of 3.0% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 3.4% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Hydrofarm Holdings Group is expected to lag the wider industry.

The Bottom Line

The clear low-light was that analysts slashing their revenue forecasts for Hydrofarm Holdings Group this year. They're also anticipating slower revenue growth than the wider market. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Hydrofarm Holdings Group after today.

Unsatisfied? At least one of Hydrofarm Holdings Group's three analysts has provided estimates out to 2026, which can be seen for free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies 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.