Zoom (ZM) Upgraded to Buy: Here's Why

Core Viewpoint - Zoom Communications (ZM) has received an upgrade to a Zacks Rank 2 (Buy) due to an upward trend in earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Movement - The Zacks rating system is based on changes in earnings estimates, which are strongly correlated with near-term stock price movements [4][6]. - Institutional investors utilize earnings estimates to determine the fair value of stocks, leading to buying or selling actions that affect stock prices [4]. Recent Performance and Outlook for Zoom - Zoom's rising earnings estimates indicate an improvement in its underlying business, which is expected to drive the stock price higher [5]. - The Zacks Consensus Estimate for Zoom's earnings per share for the fiscal year ending January 2026 is projected at $5.57, reflecting a year-over-year increase of 0.5% [8]. - Over the past three months, analysts have raised their earnings estimates for Zoom by 8.7% [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 of Zoom to a Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, indicating a strong potential for market-beating returns in the near term [10].