Phathom Pharmaceuticals (PHAT) Upgraded to Buy: Here's Why

Core Viewpoint - Phathom Pharmaceuticals, Inc. (PHAT) has received an upgrade 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 on the Zacks Consensus Estimate, which aggregates EPS estimates from sell-side analysts for the current and following years [2]. - Changes in earnings estimates are strongly correlated with 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]. - An increase in earnings estimates typically results in a higher fair value for a stock, prompting institutional investors to act accordingly [5]. Business Outlook for Phathom Pharmaceuticals - The upgrade in Zacks Rank for Phathom Pharmaceuticals reflects an improvement in the company's underlying business, which is expected to positively influence its stock price [6]. - Over the past three months, the Zacks Consensus Estimate for Phathom Pharmaceuticals has increased by 4.2%, indicating a positive trend in earnings expectations [9]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 (Strong Buy) stocks historically generating an average annual return of +25% since 1988 [8]. - Phathom Pharmaceuticals' upgrade to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, suggesting a strong potential for market-beating returns in the near term [10][11].