The 3 stocks are getting upgrades and here’s why

Improving analyst sentiment is a surefire way to move stock prices, and Lululemon Athletics NASDAQ: LULU, Target New York Stock Exchange: TGTAND Uber Technologies NYSE:UBER have it. These stocks are not only featured on Marketbeat’s Hottest Stocks list, but recent activity has seen them rise in the rankings. Given the strength of sentiment towards many AI-related names, that’s saying something. The bottom line for today is follow the money. The rising tide of analyst confidence, supported by business growth and profits, will continue to attract money to these markets and drive their stocks to new highs.

Lululemon enters the top ten of the most updated titles

Lululemon has been an analyst favorite for years, but it recently entered the top ten most updated stocks ahead of its fourth-quarter earnings report. Analysts expect revenue growth to continue to slow but remain solid at 15%, with margin unchanged and outperformance is likely. The company beat consensus in the previous four quarters, and forecasts for the fourth quarter were cautious.

Marketbeat.com tracks thirty-two analysts with current ratings; twenty-eight have been revised since the last earnings report. They pegged the stock at Moderate Buy and saw it advance 8% to the consensus midpoint. The midpoint is rising from the previous year and could continue to lead the market after the report.

Possible areas of strength include men’s clothing and footwear. The company has expanded both areas of business, while expanding margins and delivering substantial profits to shareholders. Among the risks is high valuation. At 35 times earnings, the stock is more than double that of apparel leader Ralph Lauren, even though it is pricing in double growth.

The target is back in sight: aim for higher stock prices

Target’s fall from grace is over, and the stock is a rising star on track to complete a turnaround in 2024. Fourth-quarter results weren’t great, but they revealed that the business has bottomed and that the improvements are taking effect. Analysts liked what they saw and began raising their price targets, extending a trend that began in January.

Twenty-five of the twenty-seven analysts tracked by Marketbeat have issued a review since the beginning of the year, eighteen since the release of fourth-quarter results, and all are bullish. As a result, sentiment has stabilized at Moderate Buy from Hold, and the consensus price target has risen 15% overnight, putting the stock at No. 9 on the Most Updated Stocks list. The consensus estimate implies a 5% upside from $17, 8 and the latest targets are leading the consensus higher.

Value and performance are part of Target’s turnaround story. Target’s 2.55% yield is more reliable than ever and represents value compared to Walmart. Walmart trades at earnings near 25X and yields less than 1.5%, while Target trades at just 18X earnings.

Uber offers to investors

Uber started delivering results to investors in 2023 and the rally is still strong. The stock price has risen 200% following analyst upgrades over the past eighteen months and could continue to rise after a healthy correction. Analysts are favorable on the stock, but the market has exceeded consensus and has set up a price correction that could come at any time.

The fourth-quarter report is noteworthy for several reasons, including accelerating growth, surprisingly wider adjusted margins, profits versus losses, and improved engagement, so the correction may not be deep or last long. Post-release analyst activity is favorable, including several price target increases that moved Uber to tenth place on the list of most up-to-date stocks.

Valuation is a concern for this market, but it is pricing in significant growth. The 65X traded this year will drop to 40X next year and analysts may be underestimating the company’s momentum. Details from the latest report include a growing customer base and number of trips per customer that have provided leverage for top-lines and profits that are expected to continue this year.

Before you consider Lululemon Athletica, you’ll want to hear this.

MarketBeat tracks Wall Street’s highest-rated and best-performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market takes hold… and Lululemon Athletica wasn’t on the list.

While Lululemon Athletica currently has a “Moderate Buy” rating among analysts, top analysts believe these five stocks are better buys.

View the five stocks here