And investors' appreciation of this improving business trend should push the stock higher. Their transaction of large amounts of shares then leads to price movement for the stock.įor Brightcove, rising earnings estimates and the consequent rating upgrade fundamentally mean 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 These are mostly driven by subjective factors that are hard to see and measure in real time.Īs such, the Zacks rating upgrade for Brightcove is essentially a positive comment on its earnings outlook that could have a favorable impact on its stock price. The power of a changing earnings picture in determining near-term stock price movements makes the Zacks rating system highly useful for individual investors, since it can be difficult to make decisions based on rating upgrades by Wall Street analysts. It tracks EPS estimates for the current and following years from the sell-side analysts covering the stock through a consensus measure - the Zacks Consensus Estimate. The Zacks rating relies solely on a company's changing earnings picture. This upgrade is essentially a reflection of an upward trend in earnings estimates - one of the most powerful forces impacting stock prices. Brightcove ( BCOV Quick Quote BCOV - Free Report) appears an attractive pick, as it has been recently upgraded to a Zacks Rank #2 (Buy).
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