DigitalOcean (DOCN) Upgraded to Buy: Here's Why

Core Viewpoint - DigitalOcean Holdings, Inc. (DOCN) has received an upgrade to a Zacks Rank 2 (Buy), indicating a positive outlook based on rising earnings estimates, which significantly influence stock prices [1][4]. Earnings Estimates and Ratings - The Zacks rating system is centered around the changing earnings picture, tracking the Zacks Consensus Estimate for EPS from sell-side analysts for the current and following years [2]. - A strong correlation exists between changes in earnings estimates and near-term stock price movements, making the Zacks rating system valuable for investors [3][5]. Impact of Institutional Investors - Institutional investors utilize earnings estimates to determine the fair value of stocks, leading to buying or selling actions that affect stock prices [5]. DigitalOcean's Earnings Outlook - The recent upgrade for DigitalOcean reflects an improvement in its underlying business, with rising earnings estimates expected to drive the stock price higher [6]. - DigitalOcean is projected to earn $2.02 per share for the fiscal year ending December 2025, with a 2.7% increase in the Zacks Consensus Estimate over the past three months [9]. Zacks Rank System Performance - 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 [8]. - DigitalOcean's upgrade to 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 [11].