First Merchants (FRME) ZACKS·2025-01-17 18:01Core Viewpoint - First Merchants (FRME) has received an upgrade to a Zacks Rank 2 (Buy), indicating a positive trend in earnings estimates which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Impact - The Zacks rating system is based on changes in a company's earnings picture, with the Zacks Consensus Estimate reflecting EPS estimates from sell-side analysts [1][2]. - Changes in future earnings potential, as shown by earnings estimate revisions, are strongly correlated with near-term stock price movements, particularly due to institutional investors adjusting their valuations based on these estimates [4]. Business Outlook - The upgrade suggests an improvement in First Merchants' underlying business, which could lead to increased investor interest and a potential rise in stock price [5]. - For the fiscal year ending December 2024, First Merchants is expected to earn $3.38 per share, representing a decrease of 13.1% from the previous year, although analysts have raised their estimates by 0.1% over the past three months [8]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with a strong historical performance, particularly for Zacks Rank 1 stocks which have averaged a +25% annual return since 1988 [7]. - The upgrade to Zacks Rank 2 places First Merchants in the top 20% of Zacks-covered stocks, indicating a strong potential for market-beating returns in the near term [10].