The analyst covering Forian Inc. (NASDAQ:FORA) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

Following the latest downgrade, the solo analyst covering Forian provided consensus estimates of US$19m revenue in 2024, which would reflect a small 4.6% decline on its sales over the past 12 months. After this downgrade, the company is anticipated to report a loss of US$0.18 in 2024, a sharp decline from a profit over the last year. Yet before this consensus update, the analyst had been forecasting revenues of US$22m and losses of US$0.07 per share in 2024. So there's been quite a change-up of views after the recent consensus updates, with the analyst making a serious cut to their revenue forecasts while also expecting losses per share to increase.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Forian's past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with a forecast 9.0% annualised revenue decline to the end of 2024. That is a notable change from historical growth of 19% over the last three years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 10% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Forian is expected to lag 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 Forian. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on Forian after today.

So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with Forian, including concerns around earnings quality. Learn more, and discover the 1 other flag we've identified, for free on our platform here.

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