Stock market upgrades can give you a quick indication of whether experts believe a company's shares are going to increase in the short term, usually within the next 12 months.
Using stock market analyst upgrades and downgrades may make it easier to spot opportunities in the market. You can use these to create a watchlist for potential companies to add to your portfolio.
In this article, we'll cover all the details of how to use stock upgrades. We'll also cover how to use features on this page to help make the most of them.
What is a Stock Market Upgrade?
A stock upgrade means that an analyst believes that a particular stock is undervalued and recommends that investors buy it or hold off from selling it. The analyst may also provide a new price target for the stock. For more information on how these upgrades are decided and calculated, visit our "what are analyst ratings?" page.
A number of factors determine stock upgrades, including a company's financials, recent news and the analyst's own research. However, it's important to know that analysts' opinions are not always accurate and that stock prices can move up or down, regardless of analyst rating.
What Does an Upgrade Mean for Stocks?
An analyst upgrade can mean different things for stocks, depending on the circumstances. Sometimes an analyst will upgrade a stock because they believe the company's fundamentals have improved and the stock is undervalued. Other times, an analyst may upgrade a stock because they believe the market underestimates the company's potential.
If an analyst upgrades a stock because they believe the company's fundamentals have improved, it usually means that the analyst thinks the stock is undervalued. This type of upgrade can be a positive sign for the company, as it indicates that the analyst believes the stock is worth more than the current market price.
If an analyst upgrades a stock because they believe the market underestimates the company's potential, it usually means that the analyst thinks the stock has more upside potential than the market currently prices in. This type of upgrade can be a positive sign for the company, as it indicates that the analyst believes the stock is undervalued.
In either case, an analyst upgrade can be a positive sign for a company's stock. If you are considering investing in a company, it is always worth doing your own research to see if the analyst's upgrade is based on solid reasoning.
How Can You Use Upgrades?
MarketBeat's most upgraded stocks tool can help you narrow down a list of stocks that have had their ratings and price targets increased across various time frames.
You can use this tool to help create a watchlist and to take one of the first steps toward creating a portfolio. It will also help you save time when researching the ratings of stocks individually. It also lets you compare companies with peers on a sector-by-sector basis.
Filters
Here's an explanation of the filters you can use on this page.
Country
You can filter for shares listed in the following countries:
- United States
- Canada
- United Kingdom
- Europe
- Australia
You can combine multiple countries in one filter.
Sector
When it comes to stocks, there are a variety of different classifications, including the sector. A sector is a broad category of stocks that tend to fall within the same general area of the market. For example, the health care sector includes all stocks related to the health care industry, including things like hospitals, insurance companies and pharmaceutical companies.
There are a variety of different sectors in the stock market:
- Consumer discretionary
- Consumer staples
- Energy
- Financials
- Healthcare
- Industrials
- Information technology
- Materials
- Telecommunications
- Utilities
You can filter for stocks that meet that classification by selecting a sector from the drop-down box. You can also choose to filter stocks using multiple sectors.
Market Cap
Market capitalization is a measure of the size and value of a company and one of the most commonly used indicators of a company’s strength. It is calculated by multiplying the number of a company’s shares outstanding by the current market price per share.
A company’s market capitalization provides investors with an indication of the company’s size and value and also indicates a company’s liquidity, which is the ability of a company to convert its assets into cash.
In general, companies with smaller market caps may have greater upside potential than larger-cap stocks, but this comes with an equivalent amount of risk of losing some of all of your investment. These companies are smaller and potentially have more room for growing into larger businesses.
You can search for companies using the market cap filter. You can combine multiple selections in one filter and choose from the following:
- Large cap: $10 billion or more
- Medium cap: $2 billion to $10 billion
- Small cap: Under $2 billion
Lookback Period
The lookback period is the number of days for which you'd like to get data. The longer the lookback period, the more analyst ratings and other information you will get returned as the result.
Using a long lookback period may give you a better overall sense of how the stock should perform overall, but at the cost of timeliness.
On the other hand, a shorter lookback period will give you the most up-to-date ratings on stocks. However, you may miss other stocks that have a long history of high ratings by analysts.
Due to these reasons, using both a short and long lookback period may give the most effective results.
You can filter for stocks using the following lookback periods:
- Seven days
- 30 days
- 90 days
- 180 days
- 365 days
MarketRank
MarketRank can help you easily spot opportunities in the market, depending on whether you plan to go long or short.
A company with a high MarketRank star rating could represent a buy-and-hold opportunity. A low MarketRank rating might help provide the basis for shorting the stock.
In general, stocks with a one-star rating are some of MarketBeat's lowest-rated stocks.
You can filter for stocks using MarketRanks, which range from one to five stars and can combine multiple ranks in one filter.
Media Sentiment
Media sentiment refers to the overall tone of the coverage surrounding a particular stock. This can be anything from news articles and analyst reports.
Media sentiment can have a significant impact on a stock's price, especially in the short term. If there is a positive sentiment, it can lead to a rally in the stock's price as investors buy in. On the other hand, if there is a negative sentiment, it can lead to a sell-off as investors sell their shares.
You can sort for stocks (and can combine media sentiments) rated by MarketBeat using the following:
- Very negative
- Negative
- Neutral
- Positive
- Very positive
Analyst Consensus
A stock market analyst consensus is a collection of recommendations from analysts about whether a particular stock is a buy, hold or sell. This useful tool can provide insight into what professionals think about a particular stock.
However, remember that the analyst consensus is not always accurate and that it is just one piece of information that you should consider when making investment decisions. You can use this tool to help spot the most downgraded stocks on the market.
You can filter stocks using the following analyst ratings (you can combine multiple ratings in one filter):
Available Metrics
Here's a brief explanation of the metrics used on this page, including MarketRank, number of upgrades, consensus rating, consensus price target, possible upside and indicators.
MarketRank
MarketRank is a unique feature available to MarketBeat subscribers. It weighs stocks on a maximum five-star rating, with better stocks given more stars.
To calculate a stock's MarketRank rating, we put particular emphasis on rating and valuation by analysts. Other factors include projected earnings growth, dividend strength, short interest ratio and more.
Consider MarketRank as giving you a bird's-eye view of companies that have the strongest fundamentals and valuations in the market.
Number of Upgrades
The number of upgrades reflects how many times analysts have upgraded their rating for the stock over the lookback period.
MarketBeat Consensus Rating
The consensus rating is a rating given to a stock by analysts who cover that particular stock. It is an important factor considered by investors when making investment decisions. The analyst consensus rating is determined by taking the average rating of all the analysts who cover the stock.
The rating is then expressed as the following:
- Strong sell
- Sell
- Hold
- Buy
- Strong buy
MarketBeat Consensus Price Target
Analyst price targets are the price targets set by analysts for a stock. These targets are based on the analyst's analysis of the company and its prospects.
The target price is the price at which the analyst believes the stock will trade in the future. It is important to note that the target price is not a prediction of where the stock will be trading at a specific date. Rather, it is a general estimate of where the stock will trade in the future.
Possible Upside
The possible upside of the stock is how much the stock is expected to rise and fall according to analysts. It's a calculation of the percentage change from the stock's current price to the consensus price target.
Stocks with a positive upside are expected to be worth more in the future and stocks with a negative upside are expected to be worth less.
Indicators
The "indicators" column provides links to resources that support the rationale of the analyst rating, price target and MarketRank rating.
Some of these pages include things like analyst reports, analyst revisions, news coverage and more.
How Often Are Upgrades Updated?
The frequency of analyst ratings can vary. For example, some analysts may rate a stock only once per year, while others may rate it multiple times throughout the year. Generally speaking, analysts tend to provide more ratings when a stock is new to the market or when significant news pops up, affecting the stock.
As part of the process, the analyst will review the company's financials, news and other data to determine if the stock is undervalued or overvalued. If the analyst believes the stock is undervalued, they will upgrade the stock. If the analyst believes the stock is overvalued, they will downgrade the stock.
How to Use Upgrades in Stock Research
As an investor, you always want to be ahead of the curve. That is, you want to buy stocks before they start to rise in value. This is where analyst upgrades come in. By tracking analyst ratings, you can get a sense of which stocks are about to start climbing in value and make your investments accordingly.
It may also pay to learn stock trading terms before you invest to get the most out of them.
Let's take a look at the steps for using analyst upgrades in stock research.
Step 1: Know which analysts to trust.
There are thousands of analysts out there, and it can be tough to know who to trust. You can start by looking at institutional investors — banks, hedge funds and other large financial institutions. These firms have a vested interest in accuracy, so their analysts tend to be more reliable.
To get a glimpse of which recommendations are worth considering, take a look at our most accurate Wall Street analysts page.
You can find out which individual analyst or institution rated the stock on the company's profile page under the "analyst rating" tab.
Step 2: Track analyst ratings.
Once you know which analysts to trust, start tracking their ratings. Most major financial news sites will have analyst ratings for various stocks. Alternatively, you can sign up for a service that tracks analyst ratings (such as MarketBeat).
Step 3: Look for stocks with positive ratings.
When an analyst upgrades a stock, it means they expect it to rise in value. If you see a stock that has been upgraded by multiple analysts, it’s a good sign that it might start climbing.
Step 4: Do your own research.
You should always do your own research before making any investment. Analyst ratings are a great starting point but aren't the only factor you should consider. Be sure to look at the financials of the company, the overall market trends and anything else that could impact the stock’s value.
Step 5: Choose your investment(s).
Once you’ve done your research and you’re confident in the stock, choose your investment(s). If you’re buying shares of the stock, you can do so through a broker. If you’re investing in a mutual fund or ETF that holds the stock, you can do so through any major financial institution.
Stock Upgrades Are Worth Considering
Stock market analyst upgrades are an important piece of the puzzle when considering adding a stock to a portfolio. They can save you time by filtering stocks to add to your watch list and may provide clues as to whether the stock warrants further research.
However, stock market upgrades and downgrades are not infallible and only represent one aspect of an investment decision.