ArcelorMittal South Africa Ltd (JSE:ACL) shareholders will have a reason to smile today, with the covering analyst making substantial upgrades to this year's statutory forecasts. The revenue forecast for this year has experienced a facelift, with the analyst now much more optimistic on its sales pipeline. ArcelorMittal South Africa has also found favour with investors, with the stock up an impressive 16% to R4.60 over the past week. It will be interesting to see if today's upgrade is enough to propel the stock even higher.

After the upgrade, the consensus from ArcelorMittal South Africa's lone analyst is for revenues of R39b in 2023, which would reflect a discernible 4.2% decline in sales compared to the last year of performance. Prior to the latest estimates, the analyst was forecasting revenues of R33b in 2023. It looks like there's been a clear increase in optimism around ArcelorMittal South Africa, given the solid increase in revenue forecasts.

Check out our latest analysis for ArcelorMittal South Africa

The consensus price target rose 5.6% to R5.70, with the analyst clearly more optimistic about ArcelorMittal South Africa's prospects following this update.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. Over the past five years, revenues have declined around 2.6% annually. Worse, forecasts are essentially predicting the decline to accelerate, with the estimate for an annualised 4.2% decline in revenue until the end of 2023. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 4.0% per year. So while a broad number of companies are forecast to grow, unfortunately ArcelorMittal South Africa is expected to see its sales affected worse than other companies in the industry.

The Bottom Line

The most important thing to take away from this upgrade is that the analyst lifted their revenue estimates for this year. They also expect company revenue to perform worse than the wider market. There was also an increase in the price target, suggesting that there is more optimism baked into the forecasts than there was previously. Seeing the dramatic upgrade to this year's forecasts, it might be time to take another look at ArcelorMittal South Africa.

The covering analyst is clearly in love with ArcelorMittal South Africa at the moment, but before diving in - you should be aware that we've identified some warning flags with the business, such as its declining profit margins. You can learn more, and discover the 2 other warning signs we've identified, for 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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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.

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