Meta Platforms Gets Upgraded: Is This the Time to Invest?
Meta Platforms (META) has received a notable upgrade to a Zacks Rank #2 (Buy), sparked by positive trends in earnings estimates. These changes are critical as they significantly influence stock prices.
The Importance of Earnings Estimates
The Zacks rating system focuses on a company’s earnings expectations, specifically the Zacks Consensus Estimate, which gathers EPS estimates from analysts covering the stock for current and future years.
The clarity provided by this system is advantageous for individual investors. Wall Street ratings can often be subjective, making it tough to rely solely on those for investment choices. The recent upgrade for Meta serves as a positive sign regarding its earnings outlook, which could lead to an increase in its stock price.
Earnings Potential Drives Stock Prices
The correlation between future earnings potential and stock price movements is well-established. Institutional investors heavily rely on earnings estimates for assessing a company’s true value. A rise in these estimates typically leads to increased buying activity. As a result, Meta’s improved earnings outlook suggests an enhanced business performance, likely resulting in a higher stock price.
The Benefit of Tracking Earnings Revisions
Research indicates a strong link between earnings estimate revisions and short-term stock performance. This is where the Zacks Rank system excels, leveraging these revisions to categorize stocks into five ranks, from Zacks Rank #1 (Strong Buy) to Zacks Rank #5 (Strong Sell). Since 1988, Zacks Rank #1 stocks have delivered an average annual return of +25%. You can find today’s Zacks #1 Rank (Strong Buy) stocks here >>>>.
Current Earnings Estimates for Meta Platforms
For the fiscal year ending December 2024, Meta is expected to report earnings of $22.68 per share, marking a significant 52.5% increase from the previous year.
Analysts have been increasing their projections for Meta Platforms, with the Zacks Consensus Estimate rising by 6.2% in the past three months.
Summary
In contrast to mainstream Wall Street ratings—which often lean toward positive recommendations—the Zacks rating system offers a balanced perspective. Out of over 4,000 stocks, only the top 5% achieve a ‘Strong Buy’ rating, with the next 15% earning a ‘Buy’ rating. This positions stocks in the top 20% of the Zacks universe as strong candidates for outperforming the market in the near future.
The recent upgrade of Meta Platforms to a Zacks Rank #2 places it among the top 20% of stocks in terms of estimate revisions, suggesting potential price growth soon.
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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
