Royal Bank (RY) Upgraded to Buy: Here's Why

Core Viewpoint - Royal Bank (RY) has been upgraded to a Zacks Rank 2 (Buy), indicating a positive outlook based on rising earnings estimates, which significantly influence stock prices [1][3]. Earnings Estimates and Stock Price Movement - The Zacks rating system emphasizes the correlation between changes in earnings estimates and stock price movements, driven by institutional investors who adjust their valuations based on these estimates [4][6]. - An increase in earnings estimates typically leads to higher fair value for a stock, prompting institutional investors to buy or sell, which in turn affects stock prices [4]. Recent Performance and Outlook - Royal Bank is projected to earn $9.51 per share for the fiscal year ending October 2025, with no year-over-year change expected. However, the Zacks Consensus Estimate has increased by 1.8% over the past three months, reflecting a positive trend in earnings estimates [8]. - The upgrade to Zacks Rank 2 places Royal Bank in the top 20% of Zacks-covered stocks, suggesting potential for market-beating returns in the near term [10]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with a proven track record of Zacks Rank 1 stocks generating an average annual return of +25% since 1988 [7]. - The system maintains a balanced distribution of "buy" and "sell" ratings, ensuring that only the top 5% of stocks receive a "Strong Buy" rating, which highlights the significance of Royal Bank's recent upgrade [9].