Doximity (DOCS) appears an attractive pick given a noticeable improvement in the company's earnings outlook. The stock has been a strong performer lately, and the momentum might continue with analysts still raising their earnings estimates for the company.
The rising trend in estimate revisions, which is a result of growing analyst optimism on the earnings prospects of this medical social networking site, should get reflected in its stock price. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements. This insight is at the core of our stock rating tool -- the Zacks Rank.
The five-grade Zacks Rank system, which ranges from a Zacks Rank #1 (Strong Buy) to a Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record of outperformance, with Zacks #1 Ranked stocks generating an average annual return of +25% since 2008.
For Doximity, there has been strong agreement among the covering analysts in raising earnings estimates, which has helped push consensus estimates considerably higher for the next quarter and full year.
Current-Quarter Estimate Revisions
For the current quarter, the company is expected to earn $0.24 per share, which is a change of +9.09% from the year-ago reported number.
Over the last 30 days, six estimates have moved higher for Doximity while one has gone lower. As a result, the Zacks Consensus Estimate has increased 14.29%.
Current-Year Estimate Revisions
The company is expected to earn $0.86 per share for the full year, which represents a change of +17.81% from the prior-year number.
There has been an encouraging trend in estimate revisions for the current year as well. Over the past month, seven estimates have moved up for Doximity versus no negative revisions. This has pushed the consensus estimate 13.79% higher.
Favorable Zacks Rank
Thanks to promising estimate revisions, Doximity currently carries a Zacks Rank #2 (Buy). The Zacks Rank is a tried-and-tested rating tool that helps investors effectively harness the power of earnings estimate revisions and make the right investment decision. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Our research shows that stocks with Zacks Rank #1 (Strong Buy) and 2 (Buy) significantly outperform the S&P 500.
While strong estimate revisions for Doximity have attracted decent investments and pushed the stock 16.4% higher over the past four weeks, further upside may still be left in the stock. So, you may consider adding it to your portfolio right away.
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