Core Viewpoint - Zoom Communications (ZM) has been upgraded to a Zacks Rank 2 (Buy), indicating a positive trend in earnings estimates which is a significant factor influencing stock prices [1][4]. Earnings Estimates and Ratings - The Zacks rating system is based solely on a company's changing earnings picture, tracking the Zacks Consensus Estimate for EPS from sell-side analysts [2]. - The upgrade for Zoom reflects an improvement in its earnings outlook, which is expected to positively impact its stock price [4][6]. Impact of Earnings Estimate Revisions - Changes in future earnings potential, as shown by earnings estimate revisions, are strongly correlated with near-term stock price movements [5]. - Institutional investors utilize earnings estimates to determine the fair value of stocks, leading to buying or selling actions that affect stock prices [5]. Current Earnings Outlook for Zoom - For the fiscal year ending January 2026, Zoom is projected to earn $5.37 per share, representing a year-over-year decline of 3.1% [9]. - Over the past three months, the Zacks Consensus Estimate for Zoom has increased by 5.3%, indicating a positive trend in earnings estimates [9]. 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 [8]. - The upgrade of Zoom to a Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, suggesting potential for market-beating returns in the near term [11].
Zoom (ZM) Upgraded to Buy: Here's What You Should Know