What does it mean for stock?
Investors may want to consider Soleno Therapeutics, Inc., (SLNO) as it was recently upgraded to a Zacks Rank 1 (Strong Buy). This rating change has been triggered by an upward trend of earnings estimates, one of the most powerful factors that impact stock prices.
Changes in earnings are the only determinant of a company’s Zacks Rating. The Zacks Consensus estimates are the consensus EPS estimates of the sell-side analysts covering the stock for the current year and the next.
Wall Street analysts’ rating upgrades can make it difficult for investors to make sound decisions. These ratings are often influenced by subjective factors that are difficult to measure and see in real time. Because of the power and importance of a changing earnings picture when determining near-term stock prices movements, the Zacks Rating System is useful.
The Zacks rating upgrade of Soleno Therapeutics, Inc. reflects optimism about its earnings outlook, which could translate into buying pressure or an increase in stock price.
The Most Influencing Force on Stock Prices
It has been shown that the changes in a company’s earnings potential (reflected in earnings estimation revisions) and the near term price movement of its stock is strongly correlated. Institutional investors can play a part in this relationship. These big professionals use earnings estimates and earnings estimates to calculate a company’s fair value. A stock’s fair value is simply affected by the earnings estimates used in valuation models. Institutional investors usually buy or sell shares if they see a decrease in these earnings estimates. The stock’s price movements are then caused by the large volume of shares they have sold.
Fundamentally, increasing earnings estimates and Soleno Therapeutics, Inc.’s rating upgrade indicate an improvement of the company’s business. Investors should express their appreciation for the improving business trend by pushing stock higher.
The Power of Earnings: Estimate Revisions
Empirical research has demonstrated a strong correlation in earnings estimate revision trends and near-term stock movement trends. Tracking such revisions to make an investment decision can be extremely rewarding. The tried-and-true Zacks Rank stock ranking system is a great tool for tracking earnings estimate revisions and making investment decisions.
Zacks Rank’s stock-rating system, which relies on four factors related earnings estimates to group stocks into five categories, ranging Zacks Rank #1 (Strong buy) to Zacks Rank #4 (Strong sell), has a strong externally-audited track-record, with Zacks Rank #1 stocks generating an annual average return of +25% every year since 1988. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here >>>>.
Revisions to Earnings Estimates for Soleno Therapeutics, Inc.
The company expects to earn -$0.48 a share in the fiscal year ending December 2022. This is a 92% increase year-over-year.
Analysts have been steadily increasing their estimates for Soleno Therapeutics, Inc. for the past three months. This Zacks Consensus Estimate has increased 36.6%.
Bottom Line
The Zacks rating system, unlike Wall Street’s optimistic analysts, does not give favorable recommendations. Instead, it gives equal ‘buy’ and “sell” ratings to its entire stock universe of over 4000 stocks. Market conditions aside, the Zacks rating system gives a strong buy rating to the top 5% and a strong buy rating to the remaining 15%. The placement of a stock among the top 20% Zacks-covered stocks is a sign of its superior earnings estimation revision feature. This makes it a strong candidate for producing near-term market-beating returns.
You can learn more about the Zacks Rank here >>>
Soleno Therapeutics, Inc. has been upgraded to a Zacks Rank 1 stock. This means that it is now among the top 5% Zacks covered stocks according to estimate revisions. This could mean that the stock may move higher in the short term.
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Soleno Therapeutics, Inc. (SLNO) : Free Stock Analysis Report