Market forces rained on the parade of urban-gro, Inc. (NASDAQ:UGRO) shareholders today, when the analysts downgraded their forecasts for next year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.

After this downgrade, urban-gro's three analysts are now forecasting revenues of US$90m in 2025. This would be a major 51% improvement in sales compared to the last 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 67% to US$0.34. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$105m and losses of US$0.24 per share in 2025. 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 urban-gro

The consensus price target fell 32% to US$3.57, implicitly signalling that lower earnings per share are a leading indicator for urban-gro's valuation.

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. It's clear from the latest estimates that urban-gro's rate of growth is expected to accelerate meaningfully, with the forecast 39% annualised revenue growth to the end of 2025 noticeably faster than its historical growth of 23% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 3.5% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect urban-gro to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that analysts increased their loss per share estimates for next year. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of urban-gro.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for urban-gro going out to 2027, and you can see them 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 backed by insiders.

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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.