Newsflash: Flora Growth Corp. (NASDAQ:FLGC) Analysts Have Been Trimming Their Revenue Forecasts

Today is shaping up negative for Flora Growth Corp. (NASDAQ:FLGC) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

Following the latest downgrade, Flora Growth's dual analysts currently expect revenues in 2024 to be US$68m, approximately in line with the last 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 34% to US$0.67. However, before this estimates update, the consensus had been expecting revenues of US$78m and US$0.41 per share in losses. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also expecting losses per share to increase.

See our latest analysis for Flora Growth

The consensus price target fell 9.1% to US$5.00, implicitly signalling that lower earnings per share are a leading indicator for Flora Growth's valuation.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that sales are expected to reverse, with a forecast 2.3% annualised revenue decline to the end of 2024. That is a notable change from historical growth of 73% over the last three years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 6.1% per year. It's pretty clear that Flora Growth's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at Flora Growth. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Flora Growth's revenues are expected to grow slower 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. 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 Flora Growth 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 Flora Growth's business, like major dilution from new stock issuance in the past year. For more information, you can click here to discover this and the 3 other concerns 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 downgrading their estimates. So you may also wish to search this free list of stocks with high insider ownership.

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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.