Unlike the overly optimistic Wall Street analysts whose rating systems tend to be weighted toward favorable recommendations, the Zacks rating system maintains an equal proportion of 'buy' and 'sell' ratings for its entire universe of more than 4000 stocks at any point in time. Over the past three months, the Zacks Consensus Estimate for the company has increased 15.3%. This biopharmaceutical company is expected to earn -$0.01 per share for the fiscal year ending December 2023, which represents a year-over-year change of 91.7%.Īnalysts have been steadily raising their estimates for Amarin. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here >. The Zacks Rank stock-rating system, which uses four factors related to earnings estimates to classify stocks into five groups, ranging from Zacks Rank #1 (Strong Buy) to Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record, with Zacks Rank #1 stocks generating an average annual return of +25% since 1988. Here is where the tried-and-tested Zacks Rank stock-rating system plays an important role, as it effectively harnesses the power of earnings estimate revisions. Harnessing the Power of Earnings Estimate RevisionsĮmpirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock movements, so it could be truly rewarding if such revisions are tracked for making an investment decision. Investors should show their appreciation for this improving business trend by pushing the stock higher. Their transaction of large amounts of shares then leads to price movement for the stock.įundamentally speaking, rising earnings estimates and the consequent rating upgrade for Amarin imply an improvement in the company's underlying business. An increase or decrease in earnings estimates in their valuation models simply results in higher or lower fair value for a stock, and institutional investors typically buy or sell it. The influence of institutional investors has a partial contribution to this relationship, as these big professionals use earnings and earnings estimates to calculate the fair value of a company's shares. The change in a company's future earnings potential, as reflected in earnings estimate revisions, has proven to be strongly correlated with the near-term price movement of its stock. Most Powerful Force Impacting Stock Prices They may find it difficult to make decisions based on rating upgrades by Wall Street analysts, as these are mostly driven by subjective factors that are hard to see and measure in real time.Īs such, the Zacks rating upgrade for Amarin is essentially a positive comment on its earnings outlook that could have a favorable impact on its stock price. Since a changing earnings picture is a powerful factor influencing near-term stock price movements, the Zacks rating system is very useful for individual investors. The Zacks Consensus Estimate - the consensus of EPS estimates from the sell-side analysts covering the stock - for the current and following years is tracked by the system. The sole determinant of the Zacks rating is a company's changing earnings picture. An upward trend in earnings estimates - one of the most powerful forces impacting stock prices - has triggered this rating change. The average analysts' price target for Amarin, according to Thomson/First Call, is $16.50 - more than triple the stock's price now.Amarin (AMRN) could be a solid addition to your portfolio given its recent upgrade to a Zacks Rank #2 (Buy). However, the potential market size that would open up if the FDA grants approval in December is 10 times the size of the company's market available currently. The FDA will determine whether the company's highly concentrated fish oil drug Vascepa can be marketed for treating patients with high triglyceride levels between 200 mg/dL and 499 mg/dL.Īmarin already won regulatory approval for selling Vascepa for super-high triglyceride levels of 500 mg/dL and above. What looking at the stock's chart doesn't reveal, though, is that Amarin expects a huge decision by the Food and Drug Administration by Dec. At least at first glance, the odds that shares could double by next summer seem slim at best. The steep decline stems largely from Amarin tackling commercialization of Vascepa on its own. Shares are down more than 60% since last summer and around 30% year-to-date. "3 Biotech Stocks That Could Double by Next SummerĪmarin's stock has dropped like a sinking fastball over the past year.
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