AVEO (AVEO) Upgraded to Buy: What Does It Mean for the Stock?
AVEO Pharmaceuticals (AVEO - Free Report)	could be a solid addition to your portfolio given its recent upgrade to a Zacks Rank #2 (Buy). This upgrade primarily reflects an upward trend in earnings estimates, which is one of the most powerful forces impacting stock prices.
Individual investors often find it hard to make decisions based on rating upgrades by Wall Street analysts, since these are mostly driven by subjective factors that are hard to see and measure in real time. In these situations, the Zacks rating system comes in handy because of the power of a changing earnings picture in determining near-term stock price movements.
Therefore, the Zacks rating upgrade for AVEO basically reflects positivity about its earnings outlook that could translate into buying pressure and an increase in its stock price.
For AVEO, rising earnings estimates and the consequent rating upgrade fundamentally mean an improvement in the company's underlying business. And investors' appreciation of this improving business trend should push the stock higher.
For the fiscal year ending December 2019, this cancer drug company is expected to earn -$0.17 per share, which is a change of 10.5% from the year-ago reported number.
Analysts have been steadily raising their estimates for AVEO. Over the past three months, the Zacks Consensus Estimate for the company has increased 51.4%.
The upgrade of AVEO to a Zacks Rank #2 positions it in the top 20% of the Zacks-covered stocks in terms of estimate revisions, implying that the stock might move higher in the near term.