The analysts covering Grove Collaborative Holdings, Inc. (NYSE:GROV) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for next year. 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 downgrade, the consensus from two analysts covering Grove Collaborative Holdings is for revenues of US$253m in 2024, implying a small 7.4% decline in sales compared to the last 12 months. Before the latest update, the analysts were foreseeing US$287m of revenue in 2024. It looks like forecasts have become a fair bit less optimistic on Grove Collaborative Holdings, given the measurable cut to revenue estimates.

View our latest analysis for Grove Collaborative Holdings

Notably, the analysts have cut their price target 7.7% to US$3.00, suggesting concerns around Grove Collaborative Holdings' valuation.

Of course, another way to look at these forecasts is to place them into context against the industry itself. One thing that stands out from these estimates is that shrinking revenues are expected to moderate over the period ending 2024 compared to the historical decline of 12% per annum over the past three years. Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 5.7% annually. So while a broad number of companies are forecast to grow, unfortunately Grove Collaborative Holdings is expected to see its sales affected worse than other companies in the industry.

The Bottom Line

The most important thing to take away is that analysts cut their revenue estimates for next year. They also expect company revenue to perform worse than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of Grove Collaborative Holdings' future valuation. Given the stark change in sentiment, we'd understand if investors became more cautious on Grove Collaborative Holdings 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 Grove Collaborative Holdings' business, like dilutive stock issuance over the past year. For more information, you can click here to discover this and the 3 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 downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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