The last week was full of negativity as the S&P went down nearly 3.5%. Matters were made worse by raging wildfires in Los Angeles, which have shocked people across the country. Amidst all this, there were a lot of positive developments as analysts continued to point out companies poised for a great performance in 2025.
Artificial Intelligence stocks continue to dominate coverage despite the fear of a slowdown in spending. With agentic AI the new hype, many companies are only just entering their AI journey, so investors still have a lot of undervalued plays that are worth looking at.
To come up with the list of 10 companies that analysts just upgraded, we only considered companies with a market cap of at least $1 billion.
10. Sempra (NYSE:SRE)
Sempra received an upgrade from Morgan Stanley, which raised its price target to $98 from $85. The analysts at Morgan Stanley expect strong growth this year. Sempra operates in California and Texas. With Texas boasting the most data center-related activity among all US states, the company is set to benefit from the continuing AI spending.
Sempra has been struggling recently to manage its rising costs as well as declining revenues in the state of California. However, there are considerable growth avenues going ahead which, when looked at in the context of its stable and strong business, offer a promising risk-to-reward ratio. In fact, even though its California business is declining, the cash flows continue to stay at healthy levels.
Sempra is also different from its peers in that it has investments in both LNG and renewable energy infrastructure. The stability, diversification, and growth make for a sound investment which is reflected in the recent ratings upgrades.
9. Verint Systems Inc. (NASDAQ:VRNT)
Verint Systems offers customer engagement solutions to a global audience. Its Verint Open platform helps automate processes across the customer journey at the website and app level as well as at the contact center and back office. After a lackluster 2024, the company has now made it to the Needham Conviction List because of a number of catalysts in 2025.
Analysts expect companies to spend more on contact centers in 2025 after cutting down on this expenditure in 2022. What differentiates Verint Systems from competitors is that it uses AI to improve contact center operations. This spending should be well complemented by growth in recurring revenue, stock buybacks, and the company’s free cash flow. While there are risks associated with the stock, the drop in stock price in the last month covers a good part of those risks.
8. Globe Life (NYSE:GL)
Globe Life is a health insurance company that operates through four main segments: life insurance, health insurance, investments, and annuities. It primarily serves lower and middle-income households in the US. The insurance company was upgraded from In Line to Outperform by Evercore ISI.
Globe Life was accused last year of using MLM tactics to generate sales. MLM marketing refers to a marketing strategy where people get a commission to generate sales. They also get paid for bringing in more people who can then generate more sales. This is considered an unethical practice. When this report came out, the stock price tanked.
That seems to be in the past though as the company is trying to move on from that scandal. Two months ago, it announced a stock repurchase authorization of $1.8 billion. By doing so, the company expressed confidence in its own affairs, increasing the positive investor sentiment. That sentiment now seems to be reflected by analysts as well, as the Evercore ISI upgrade shows. The company is expected to clock in improved margins in 2025 on the back of Medicare supplement repricing. The negative sentiment surrounding the stock should lessen as its financials improve.
7. NXP Semiconductors (NASDAQ:NXPI)
NXP Semiconductors is a semiconductor company that has been out of favor among investors for the last two quarters. The chipmaker is not only exposed to China but it is also heavily reliant on Apple, a company that has been moving its chip-making requirements in-house and may eventually stop using NXPI’s services too.
That negativity may soon be a thing of the past. Goldman Sachs has just upgraded the firm from its Neutral rating to Buy. The firm believes NXPI will be one of the strongest semi-stocks in 2025. The upgrade has a lot to do with the firm’s conviction in AI spending. Even though the spending may slow down, a cyclical stock like NXPI will eventually reap the benefits of changing market dynamics.
Sometime in 2025, the cyclicality of the stock is likely to bottom out. Analysts believe the automotive market is in the final stages of its downturn and investors will realize that soon enough. This means the stock could start pricing in a cyclical recovery by the second half of the year. 2025 will therefore be a defining year for investors who want to achieve gains in semi-stocks in the next 3 years.
6. Workday, Inc. (NASDAQ:WDAY)
Workday received acknowledgment of its efforts from three different analysts last week. The ERP firm has delivered muted returns in the past 5 years, so the analyst recommendations offer hope to investors that the stock’s fortunes may be about to change.
Deutsche Bank upgraded the stock from Hold to Buy and increased the price target from $265 to $300. The company’s Recruiter Agent, which helps hiring managers streamline their recruitment processes, could drive considerable growth considering its ability to offer agentic AI solutions soon. 30% of the company’s deals in the third fiscal quarter came with AI partners, which shows how the company is actively trying to leverage AI to help businesses manage their operations in a better way.
Barclays mentioned similar optimism around the company’s AI ambitions in light of agentic AI solutions. Meanwhile, Wells Fargo added the company to its list of stocks that could offer above-average growth this year. With over 60% gross margins, expected revenue CAGR of 15% over the next 3 years, and a 4% earnings yield, all-time highs are possibly just around the corner.
5. Shell plc (NYSE:SHEL)
Shell is an energy and petrochemical company that operates through the segments of integrated gas, upstream, marketing, chemicals and products, and renewable and energy solutions. The company markets and trades commodities, including LNG, natural gas, electricity, oil, and carbon emission rights. It was upgraded by UBS from Neutral to Buy on the back of its cash flow strength.
Although Shell’s shares are down 10%, the company boasts a strong balance sheet which should also be adequate to complete its ongoing buyback. According to UBS analysts, there’s an opportunity for $6B through cost-saving measures. This amount can be utilized to meet or exceed the company’s 2025 targets.
With a free cashflow yield of 14%, Shell’s FCF yield is ranked as the highest among European oil stocks. The company’s financial health is solid with significant profits and low debt. The company has no massive debt to pay off and several growth projects, so it can be a good option to consider in 2025.
4. Agilon Health (NYSE:AGL)
Agilon Health stock has lost 70% value in a year. The company’s volatility and lack of fundamental health have driven investors away. However, things are looking brighter for the company in 2025 as it receives its first analyst upgrade. Citi upgraded the stock to Neutral from Sell and added it to its stocks list for the Health Tech and Distribution space.
Interestingly enough, the upgrade comes not because of positive developments but because the negatives associated with the stock seem to be diminishing. There is reason to believe that the stock might have bottomed out, prompting the upgrade from the analysts.
Moreover, the Trump administration is likely to bring in favorable policies under the new leadership at the Centers for Medicare & Medicaid Services. Citi had previously downgraded the stock to Sell in October, around the same time the stock received a downgrade from Bank of America analyst Adam Ron. If the stock can overcome the October price levels, there could be a significant rally on the back of this renewed optimism.
3. The Allstate Corporation (NYSE:ALL)
Allstate Corporation is an insurance company that mainly deals with property and casualty insurance. The company received an upgrade from Evercore ISI, getting an Outperform rating. The stock is up 20% in a year but analysts believe there is room for more.
There are a number of factors that will drive this growth. The company’s 2025 EPS estimates have been inching higher in the last year. An EPS revision of nearly 20% from the lowest point in 2024 is still considered a conservative estimate and going by the company’s history, a comfortable beat can’t be ruled out.
In other developments, activist investor Nelson Peltz has sold a vast portion of his stake in the company, so the activist threat is also subsiding. The company’s investment income was also under threat as the Fed started lowering interest rates. However, recent Fed meetings point to a halt in rate cuts, another positive development for the company that should help drive the stock price up in the coming weeks.
2. Accenture plc (NYSE:ACN)
Accenture plc is a consulting company operating globally. It serves various sectors including communications, media and technology, health and public service; retail, consumer goods, banking and capital markets, natural resources, energy, and utilities. Its stock received an upgrade from Wolfe Research from peer performance to outperform with a target price of $425.
According to analyst Darrin Peller, downside risk remains quite low, as per the guidance discretionary conditions are assumed to be stable. Wolfe Research’s Analysts believed that discretionary demand is likely to improve going forward. Political stability and interest rate cuts could help improve the government’s budgets, ultimately benefitting service providers like Accenture.
The company’s investment in GenAI can help gain market share as client demand for GenAI grows. As more companies move towards implementing AI to streamline their business operations, ACN is set to benefit.
1. CyberArk Software (NASDAQ:CYBR)
CyberArk became Needham’s top pick in the cybersecurity sector based on growth and synergies from the Venafi cross-sell. On the back of the Venafi acquisition, the company is expected to up its annual recurring revenue guidance to $1.39 billion.
In a note to clients, Needham analyst Matt Dezort mentioned that despite significant outperformance in 2024, the stock is poised for sustainable gains in 2025 as well. He upgraded the price target on the stock from $360 to $410.
In the past, CyberArk has been really conservative with guidance, eventually beating expectations by over 5% every year. 2025 should be similar according to analysts, even in the absence of any major catalyst to the upside.
Just last week, Wells Fargo also added the company to its Tactical Idea list and upgraded its price target to $410.
CyberArk is not on our latest list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 51 hedge fund portfolios held CYBR at the end of the third quarter which was 55 in the previous quarter. While we acknowledge the potential of CYBR as a leading AI investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as CYBR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.
