Today, we will discuss three recent analyst upgrades on Wall Street. Earnings season is in full swing, and the market is navigating volatility and uncertainty. The current market choppiness highlights the need for diversifying portfolios to include robust shares that may get analyst upgrades. On July 24, stocks sold off following underwhelming reports from Tesla (NASDAQ:TSLA) and Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL), causing the S&P 500 index and Nasdaq Composite to post their worst sessions since 2022.
With tech stocks, especially those with an artificial intelligence (AI) focus, losing their luster in July, the Nasdaq Composite is trading around 8% below its all-time high of July 11. Meanwhile, the S&P 500 is down nearly 5% from its record high on July 16.
As a result, investors are keeping an even closer eye on the earnings season and analyst upgrades for stocks that may release strong earnings. According to FactSet data, over 25% of S&P 500 companies have reported their second-quarter earnings, with nearly 80% exceeding expectations. Amid the current volatility, analyst upgrades are vital for pinpointing high-potential stock opportunities. With that information, here are three stocks with recent analyst upgrades to buy in the third quarter.
Accenture (ACN)
We begin today’s discussion with Accenture (NYSE:ACN), a standout among top stocks receiving analyst upgrades. This Ireland-based global professional services firm specializes in strategy, consulting, technology and operations.
In its third quarter 2024 earnings report released on June 20, Accenture showed a mixed performance. Revenues grew 1.4% in local currency to $16.5 billion. However, adjusted net income fell 1.5% to $2.04 billion, and adjusted EPS decreased 2% to $3.13. The declines were due to negative foreign exchange impacts, business optimization costs and a higher tax rate.
July was a busy month for Accenture, marked by strategic acquisitions and the addition of numerous firms to its portfolio. Management hopes the enlarged group will better support clients in system modernization and adopting cloud, data, AI and IoT technologies. It also launched the Accenture AI Refinery framework, built on Nvidia’s (NASDAQ:NVDA) AI Foundry, to help clients develop custom large language models (LLMs).
On July 19, UBS (NYSE:UBS) upgraded Accenture from ‘Neutral’ to ‘Buy’ with a $400 price target, citing anticipated revenue growth from AI integration. Meanwhile, Wall Street’s 12-month median price forecast for ACN stock is $350.00, indicating about 6% upside potential from current levels.
So far in 2024, ACN stock has declined over 5% but offers a 1.6% dividend yield. The shares are trading at 25.3 times forward earnings and 3.3 times sales.
Allstate (ALL)
Next on our list of stocks with analyst upgrades is the insurer Allstate (NYSE:ALL). The company provides various property and casualty insurance products in the U.S. and Canada. They focus on providing personal lines insurance — for individuals and families rather than businesses.
On May 1, Allstate reported robust financial results for the first quarter. Consolidated revenues surged 10.7% YOY to $15.3 billion. Adjusted net income made a remarkable turnaround, from a net loss of $342 million to a net profit of $1.4 billion. Additionally, adjusted diluted EPS jumped to $5.13 from a loss of $1.30 last year. Stronger property liability underwriting results drove this success.
In a vote of confidence, BMO Capital, part of Bank of Montreal (NYSE:BMO), upgraded Allstate to ‘Outperform’ from ‘Market Perform,’ raising the price target to $191. BMO Capital highlighted the success of Allstate’s five-year transformation plan, which positions the company for a more aggressive customer acquisition strategy. On average, Wall Street analysts project a 12-month price target of $195.00 for ALL stock with a potential upside of 18%.
Year-to-date (YTD), ALL stock has soared almost 18%, complemented by a 2.2% dividend yield. The shares are trading at 13.7 times forward earnings and 0.8 times sales.
Permian Resources (PR)
The energy company Permian Resources (NYSE:PR) is rounding out our discussion on recent analyst upgrades. Permian Resources operates mainly in the Delaware Basin, specializing in crude oil and natural gas reserves. It holds significant assets in Reeves County, West Texas and Lea County, New Mexico.
In early May, Permian Resources reported strong financials for the first quarter 2024. Adjusted operating cash flow was $844 million, or $1.09 per share. Adjusted free cash flow reached $324 million, or 42 cents per share, up from 26 cents a year ago. The company also raised its full-year guidance for total production by 2%.
On July 3, BMO Capital upgraded Permian Resources to ‘Outperform.’ The firm highlighted PR’s expanded Delaware footprint, solid operations and attractive valuation. UBS followed with an upgrade to ‘Buy’ from ‘Neutral,’ raising the price target to $21. This upgrade reflects an improved oil production outlook and increased synergies from the Earthstone Energy acquisition. In aggregate, analysts are optimistic, projecting a potential 30% upside for PR stock, with a 12-month median price target of $20.
PR stock has appreciated around 13% YTD and offers a 3.7% dividend yield. It currently trades at 9.3 times forward earnings and 1.9 times sales.
On the date of publication, Tezcan Gecgil did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.