Zacks Rating Upgrade for Givaudan - Givaudan SA has been upgraded to a Zacks Rank 2 (Buy) due to an upward trend in earnings estimates, which is a powerful force impacting stock prices [1] - The Zacks rating system relies solely on a company's changing earnings picture, tracking EPS estimates for the current and following years through the Zacks Consensus Estimate [1] - The upgrade reflects positivity about Givaudan's earnings outlook, which could translate into buying pressure and an increase in its stock price [1] Earnings Estimate Revisions and Stock Price Movement - Changes in a company's future earnings potential, as reflected in earnings estimate revisions, are strongly correlated with near-term stock price movements [2] - Institutional investors use earnings and earnings estimates to calculate the fair value of a company's shares, leading to bulk investment actions that influence stock prices [2] - For Givaudan, rising earnings estimates and the consequent rating upgrade indicate an improvement in the company's underlying business, which should push the stock higher [2] Zacks Rank System and Earnings Estimate Revisions - The Zacks Rank stock-rating system uses four factors related to earnings estimates to classify stocks into five groups, with Zacks Rank 1 stocks generating an average annual return of +25% since 1988 [3] - The system effectively harnesses the power of earnings estimate revisions, which have a strong correlation with near-term stock movements [3] Givaudan's Earnings Estimate Revisions - For the fiscal year ending December 2024, Givaudan is expected to earn $2.88 per share, a 33.3% increase from the year-ago reported number [4] - Over the past three months, the Zacks Consensus Estimate for Givaudan has increased by 1.4% [4] Zacks Rank System's Superiority - The Zacks rating system maintains an equal proportion of 'buy' and 'sell' ratings for its universe of over 4000 stocks, with only the top 5% receiving a 'Strong Buy' rating and the next 15% receiving a 'Buy' rating [5] - Givaudan's upgrade to a Zacks Rank 2 positions it in the top 20% of Zacks-covered stocks in terms of estimate revisions, indicating potential for market-beating returns in the near term [5]
Givaudan (GVDNY) Upgraded to Buy: What Does It Mean for the Stock?