News Flash: Analysts Just Made A Meaningful Upgrade To Their Flora Growth Corp. (NASDAQ:FLGC) Forecasts

Flora Growth Corp. (NASDAQ:FLGC) shareholders will have a reason to smile today, with the analysts making substantial upgrades to next year's forecasts. The analysts have sharply increased their revenue numbers, with a view that Flora Growth will make substantially more sales than they'd previously expected.

After this upgrade, Flora Growth's five analysts are now forecasting revenues of US$73m in 2023. This would be a huge 140% improvement in sales compared to the last 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 93% to US$0.048. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$66m and losses of US$0.052 per share in 2023. We can see there's definitely been a change in sentiment in this update, with the analysts administering a sizeable upgrade to next year's revenue estimates, while at the same time reducing their loss estimates.

View our latest analysis for Flora Growth

Yet despite these upgrades, the analysts cut their price target 7.5% to US$2.47, implicitly signalling that the ongoing losses are likely to weigh negatively on Flora Growth's valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Flora Growth analyst has a price target of US$4.50 per share, while the most pessimistic values it at US$0.85. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely differing views on what kind of performance this business can generate. As a result it might not be possible to derive much meaning from the consensus price target, which is after all just an average of this wide range of estimates.

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. We can infer from the latest estimates that forecasts expect a continuation of Flora Growth'shistorical trends, as the 101% annualised revenue growth to the end of 2023 is roughly in line with the 123% annual revenue growth over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 8.2% per year. So it's pretty clear that Flora Growth is forecast to grow substantially faster than its industry.

The Bottom Line

The most important thing here is that analysts reduced their loss per share estimates for next year, reflecting increased optimism around Flora Growth's prospects. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than 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 that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Flora Growth.

These earnings upgrades look like a sterling endorsement, but before diving in - you should know that we've spotted 5 potential warning signs with Flora Growth, including dilutive stock issuance over the past year. For more information, you can click through to our platform to learn more about this and the 4 other warning signs we've identified .

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks 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.