Freshworks (FRSH) Moves to Strong Buy: Rationale Behind the Upgrade

Core Viewpoint - Freshworks Inc. has been upgraded to a Zacks Rank 1 (Strong Buy) due to an upward trend in earnings estimates, which is a significant factor influencing stock prices [1][2] 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 [3][5] - Institutional investors often rely on earnings estimates to determine the fair value of stocks, leading to buying or selling actions that affect stock prices [3] Freshworks' Earnings Outlook - For the fiscal year ending December 2025, Freshworks is expected to earn $0.57 per share, unchanged from the previous year [7] - Over the past three months, the Zacks Consensus Estimate for Freshworks has increased by 20.5%, indicating a positive trend in earnings estimates [7] Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [6] - Only the top 5% of Zacks-covered stocks receive a "Strong Buy" rating, indicating superior earnings estimate revisions [8][9] Implications for Investors - The upgrade to Zacks Rank 1 positions Freshworks among the top 5% of stocks, suggesting potential for market-beating returns in the near term [9]