Phathom Pharmaceuticals (PHAT) Upgraded to Buy: Here's What You Should Know

Core Viewpoint - Phathom Pharmaceuticals, Inc. (PHAT) has been upgraded to a Zacks Rank 2 (Buy) due to an upward trend in earnings estimates, which is a significant factor influencing stock prices [1][4]. Earnings Estimates and Ratings - The Zacks rating system is primarily based on a company's changing earnings picture, specifically tracking the Zacks Consensus Estimate for EPS from sell-side analysts [2]. - The Zacks rating upgrade for Phathom Pharmaceuticals indicates a positive outlook on its earnings, which could positively affect its stock price [4][6]. Impact of Earnings Estimates on Stock Prices - Changes in a company's future earnings potential, reflected in earnings estimate revisions, are strongly correlated with near-term stock price movements, influenced by institutional investors [5]. - Rising earnings estimates for Phathom Pharmaceuticals suggest an improvement in the company's underlying business, likely leading to an increase in stock price as investors respond to this trend [6]. Importance of Earnings Estimate Revisions - Empirical research shows a strong correlation between earnings estimate revisions and near-term stock movements, making tracking these revisions beneficial for investment decisions [7]. - The Zacks Rank stock-rating system effectively utilizes earnings estimate revisions to classify stocks, with a proven track record of performance [8]. Current Earnings Estimates for Phathom Pharmaceuticals - For the fiscal year ending December 2024, Phathom Pharmaceuticals is expected to earn -$4.34 per share, reflecting a year-over-year change of -71.5% [9]. - Over the past three months, the Zacks Consensus Estimate for Phathom Pharmaceuticals has increased by 21.5%, indicating a positive trend in earnings estimates [9]. Zacks Rating System Overview - The Zacks rating system maintains a balanced distribution of 'buy' and 'sell' ratings across its universe of over 4000 stocks, with only the top 5% receiving a 'Strong Buy' rating [10]. - Phathom Pharmaceuticals' upgrade to a Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, suggesting a strong potential for market-beating returns in the near term [12].