ASLAN Pharmaceuticals Ltd. (ASLN) Upgraded to Strong Buy: Here's Why
Zacks
Zacks Equity Research
,Zacks•January 13, 2020
ASLAN Pharmaceuticals Ltd. (ASLN) Upgraded to Strong Buy: Here's Why
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ASLAN Pharmaceuticals Ltd. (ASLN) could be a solid addition to your portfolio given its recent upgrade to a Zacks Rank #1 (Strong Buy). This upgrade primarily reflects an upward trend in earnings estimates, which is one of the most powerful forces impacting stock prices.
The sole determinant of the Zacks rating is a company's changing earnings picture. 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.
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. 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.
Therefore, the Zacks rating upgrade for ASLAN Pharmaceuticals Ltd. basically reflects positivity about its earnings outlook that could translate into buying pressure and an increase in its stock price.
Most Powerful Force Impacting Stock Prices
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. That's partly because of the influence of institutional investors that use earnings and earnings estimates for calculating the fair value of a company's shares. 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. Their transaction of large amounts of shares then leads to price movement for the stock.
For ASLAN Pharmaceuticals Ltd. 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.
Harnessing the Power of Earnings Estimate Revisions
Empirical 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. 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.
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. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here >>>>.
Earnings Estimate Revisions for ASLAN Pharmaceuticals Ltd.
For the fiscal year ending December 2019, this company is expected to earn -$0.67 per share, which is a change of 52.1% from the year-ago reported number.
Analysts have been steadily raising their estimates for ASLAN Pharmaceuticals Ltd. Over the past three months, the Zacks Consensus Estimate for the company has increased 26.6%.
Bottom Line
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. Irrespective of market conditions, only the top 5% of the Zacks-covered stocks get a 'Strong Buy' rating and the next 15% get a 'Buy' rating. So, the placement of a stock in the top 20% of the Zacks-covered stocks indicates its superior earnings estimate revision feature, making it a solid candidate for producing market-beating returns in the near term.
You can learn more about the Zacks Rank here >>>
The upgrade of ASLAN Pharmaceuticals Ltd. to a Zacks Rank #1 positions it in the top 5% of the Zacks-covered stocks in terms of estimate revisions, implying that the stock might move higher in the near term.
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ASLAN Pharmaceuticals Ltd. (ASLN) : Free Stock Analysis Report
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Is ASLAN Pharmaceuticals (ASLN) Outperforming Other Medical Stocks This Year?
Zacks
Zacks Equity Research
,Zacks•January 6, 2020
For those looking to find strong Medical stocks, it is prudent to search for companies in the group that are outperforming their peers. ASLAN Pharmaceuticals (ASLN) is a stock that can certainly grab the attention of many investors, but do its recent returns compare favorably to the sector as a whole? One simple way to answer this question is to take a look at the year-to-date performance of ASLN and the rest of the Medical group's stocks.
ASLAN Pharmaceuticals is a member of our Medical group, which includes 909 different companies and currently sits at #3 in the Zacks Sector Rank. The Zacks Sector Rank includes 16 different groups and is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors.
The Zacks Rank is a proven system that emphasizes earnings estimates and estimate revisions, highlighting a variety of stocks that are displaying the right characteristics to beat the market over the next one to three months. ASLN is currently sporting a Zacks Rank of #2 (Buy).
Within the past quarter, the Zacks Consensus Estimate for ASLN's full-year earnings has moved 26.61% higher. This means that analyst sentiment is stronger and the stock's earnings outlook is improving.
Based on the latest available data, ASLN has gained about 6.40% so far this year. Meanwhile, the Medical sector has returned an average of -0.70% on a year-to-date basis. This shows that ASLAN Pharmaceuticals is outperforming its peers so far this year.
Looking more specifically, ASLN belongs to the Medical - Biomedical and Genetics industry, a group that includes 389 individual stocks and currently sits at #57 in the Zacks Industry Rank. On average, this group has lost an average of 1.44% so far this year, meaning that ASLN is performing better in terms of year-to-date returns.
Investors with an interest in Medical stocks should continue to track ASLN. The stock will be looking to continue its solid performance.
Click to get this free report ASLAN Pharmaceuticals Ltd. (ASLN) : Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research
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