Hydrofarm Holdings Group, Inc. (NASDAQ:HYFM) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year’s forecasts. The consensus statutory numbers for both revenue and earnings per share (EPS) increased, with their view clearly much more bullish on the company’s business prospects.
Following the upgrade, the current consensus from Hydrofarm Holdings Group’s five analysts is for revenues of US$427m in 2021 which – if met – would reflect a sizeable 38% increase on its sales over the past 12 months. The losses are expected to disappear over the next year or so, with forecasts for a profit of US$0.47 per share this year. Prior to this update, the analysts had been forecasting revenues of US$386m and earnings per share (EPS) of US$0.41 in 2021. So we can see there’s been a pretty clear increase in analyst sentiment in recent times, with both revenues and earnings per share receiving a decent lift in the latest estimates.
It will come as no surprise to learn that the analysts have increased their price target for Hydrofarm Holdings Group 7.3% to US$77.25 on the back of these upgrades. That’s not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Hydrofarm Holdings Group at US$95.00 per share, while the most bearish prices it at US$70.00. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
Of course, another way to look at these forecasts is to place them into context against the industry itself. The period to the end of 2021 brings more of the same, according to the analysts, with revenue forecast to display 38% growth on an annualised basis. That is in line with its 35% annual growth over the past year. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 7.6% annually. So although Hydrofarm Holdings Group is expected to maintain its revenue growth rate, it’s definitely expected to grow faster than the wider industry.
The Bottom Line
The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. With a serious upgrade to expectations and a rising price target, it might be time to take another look at Hydrofarm Holdings Group.
Still, the long-term prospects of the business are much more relevant than next year’s earnings. We have estimates – from multiple Hydrofarm Holdings Group analysts – going out to 2022, and you can see them free on our platform here.
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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