StepStone Group (STEP) Upgraded to Buy: What Does It Mean for the Stock?

Core Viewpoint - StepStone Group Inc. (STEP) has received an upgrade to a Zacks Rank 2 (Buy), indicating a positive outlook on its 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 the consensus measure of EPS estimates from sell-side analysts, reflecting the company's changing earnings picture [1][2]. - Changes in earnings estimates are strongly correlated with near-term stock price movements, influenced by institutional investors who adjust their valuations based on these estimates [4][5]. Recent Performance and Projections - StepStone Group is projected to earn $1.98 per share for the fiscal year ending March 2026, with no year-over-year change, but the Zacks Consensus Estimate has increased by 2.7% over the past three months [8]. - The upgrade to Zacks Rank 2 places StepStone in the top 20% of Zacks-covered stocks, suggesting potential for higher stock prices in the near term [10]. 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 system maintains a balanced distribution of ratings, ensuring that only the top 20% of stocks receive a "Strong Buy" or "Buy" rating, indicating superior earnings estimate revisions [9][10].