Shareholders in CIMIC Group Limited (ASX:CIM) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The analysts have sharply increased their revenue numbers, with a view that CIMIC Group will make substantially more sales than they'd previously expected. The stock price has risen 9.4% to AU$21.03 over the past week, suggesting investors are becoming more optimistic. It will be interesting to see if this latest upgrade is enough to kickstart further buying interest in the stock.

Following the upgrade, the current consensus from CIMIC Group's six analysts is for revenues of AU$15b in 2021 which - if met - would reflect a substantial 84% increase on its sales over the past 12 months. Losses are expected to turn into profits real soon, with the analysts forecasting AU$1.38 in per-share earnings. Previously, the analysts had been modelling revenues of AU$13b and earnings per share (EPS) of AU$1.36 in 2021. It seems analyst sentiment has certainly become more bullish on revenues, even though they haven't changed their view on earnings per share.

View our latest analysis for CIMIC Group

Even though revenue forecasts increased, there was no change to the consensus price target of AU$27.20, suggesting the analysts are focused on earnings as the driver of value creation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values CIMIC Group at AU$33.50 per share, while the most bearish prices it at AU$21.10. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

Of course, another way to look at these forecasts is to place them into context against the industry itself. One thing stands out from these estimates, which is that CIMIC Group is forecast to grow faster in the future than it has in the past, with revenues expected to display 240% annualised growth until the end of 2021. If achieved, this would be a much better result than the 4.9% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 13% per year. Not only are CIMIC Group's revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.

The Bottom Line

The most obvious conclusion from this consensus update is that there's been no major change in the business' prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. Seeing the dramatic upgrade to this year's forecasts, it might be time to take another look at CIMIC Group.

Still, the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for CIMIC Group going out to 2023, 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.

This article by Simply Wall St is general in nature. 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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