Applied Therapeutics Inc. (APLT) has caught the attention of investors after receiving an upgrade to a Zacks Rank #2 (Buy). This upgrade signifies a positive shift in the company’s earnings outlook, a powerful force that often drives stock prices.
The Zacks Rank system is built upon the principle that a company’s changing earnings picture is a crucial indicator of its future performance. The system meticulously tracks the Zacks Consensus Estimate, which represents the collective opinion of sell-side analysts regarding a company’s earnings per share (EPS) for the current and upcoming years.
The power of earnings estimate revisions in influencing stock prices is undeniable. As institutional investors, who play a significant role in market movements, utilize earnings data to determine a company’s fair value, any adjustments in these estimates directly impact their investment decisions.
In the case of Applied Therapeutics, the upgraded Zacks Rank points to an improvement in its underlying business operations, reflected in the upward trend of earnings estimates. This improvement in earnings potential offers a compelling reason for investors to consider adding APLT to their portfolios.
The Zacks Rank system, which classifies stocks into five categories based on earnings estimate revisions, has a proven track record of success. Over the years, Zacks Rank #1 stocks have consistently delivered exceptional returns, averaging a remarkable +25% annually since 1988.
For Applied Therapeutics, analysts have been steadily raising their EPS estimates for the fiscal year ending December 2024. The Zacks Consensus Estimate has increased by 18.6% over the past three months, signaling a growing confidence in the company’s future performance.
Unlike Wall Street analysts whose rating systems can sometimes be swayed by subjective factors, the Zacks Rank system maintains a balanced approach, ensuring an equal distribution of ‘buy’ and ‘sell’ ratings across its universe of over 4000 stocks. The top 5% of Zacks-covered stocks receive a ‘Strong Buy’ rating, followed by the next 15% with a ‘Buy’ rating.
With its placement in the top 20% of Zacks-covered stocks, Applied Therapeutics stands out as a strong candidate for generating market-beating returns. The upgraded Zacks Rank #2 further reinforces this potential, suggesting that the stock may experience upward movement in the near term.
Investors looking for opportunities in the healthcare sector might find Applied Therapeutics a compelling investment prospect. The company’s positive earnings trajectory, reflected in the upgraded Zacks Rank, warrants closer attention from those seeking to capitalize on improving business trends.
