The Wall Street rally has continued in April with the S&P 500 trading near recently-set record highs. The stronger-than-expected jobs report has boosted investor optimism as the U.S. economy remains resilient despite higher rates. In a bull market, Wall Street analysts tend to often raise ratings on stocks as they expect the outperformance to continue in the near term. In this blog post, we look at 3 stocks upgraded by analysts recently.

Analyst upgrades are a reflection of a positive sentiment among investors. Analysts tend to have regular conversations with large investors before they make recommendations on assets. The Wall Street sentiment received another boost yesterday after Wells Fargo (NYSE:WFC) raised its S&P 500 price target to the highest on the Street among large banks.

A new target of 5535, up from 4625, is based on an earnings estimate of $270 for 2025 and a 20.5 times earnings valuation. This change suggests a 6% increase from current levels, indicating continued confidence in the market’s upward trend. 

The bank’s strategists believe that the emphasis on artificial intelligence’s growth and the concentrated nature of index holdings have led investors to focus more on future growth potentials rather than traditional valuation metrics.

They also note that systemic risk may be increasing due to current monetary policies encouraging risk-taking and leverage. However, they do not see an immediate peak in this risk, supporting continued aggressive valuation strategies until certain economic indicators signal otherwise. 

Their investment strategy recommendation includes a mix of growth sectors like communications with defensive sectors such as healthcare and utilities. Mid-cap growth is highlighted for offering the best risk/reward due to its valuation, technicals and fundamentals.

Ulta Beauty (ULTA)

Ulta Beauty (NASDAQ:ULTA) is a leading beauty retailer in the United States, offering a diverse range of cosmetics, skincare products, fragrances, hair care items and beauty services. The company’s stock saw its most significant drop since March 2020 after company executives indicated a slowdown in consumer interest for beauty products, negatively affecting the stock performance of similar companies in the industry.

While many investors moved to sell shares in the company following this warning, the selloff has prompted some analysts to urge investors to buy a dip in this popular beauty and cosmetics stock. The company’s strong fourth-quarter results, including a 14.6% operating margin — higher than the third quarter and surpassing management’s forecasts — highlight the continuing strong demand for beauty products, analysts say.

Most recently, Loop Capital upgraded Ulta Beauty stock from Hold to Buy as it believes the recent selloff is an overreaction, especially considering the challenging comparison Ulta faces in the first quarter of 2024. This leaves Ulta Beauty as one of the most debated stocks upgraded by analysts in recent days.

The forecast improvement over 2024’s remaining quarters is expected to be driven by easier year-on-year comparisons and new product launches. The analysts also anticipate that Ulta’s strategic stock buybacks and the potential initiation of a quarterly cash dividend could serve as positive catalysts for the stock.

Take-Two Interactive (TTWO)

Take-Two Interactive (NASDAQ:TTWO) is a prominent video game publisher known for its critically acclaimed franchises such as “Grand Theft Auto,” “Red Dead Redemption,” and “NBA 2K.” Take-Two also owns labels like Rockstar Games and 2K, offering a diverse portfolio of games across various genres for multiple platforms.

On Monday, the TTWO stock gained after Citi (NYSE:C) analysts raised their recommendation on shares and offered some very positive comments that gained wider investor attention. More precisely, Citi analysts raised their rating from Neutral to Buy, increasing the price target from $170 to $200. 

The upgrade reflects optimism despite uncertainties surrounding the release timing of “GTA VI,” its potential bookings and the performance of the company’s mobile games portfolio. The analysts outlined a bullish scenario of $235 and a bearish one at $130 for the stock, suggesting a favorable risk-to-reward ratio of 4:1 at current levels. 

This analyst move comes after TTWO shares dipped two weeks ago following a report by a video gaming site Kotaku, which cited unnamed sources stating that the development of Grand Theft Auto VI is lagging, potentially missing its 2025 release target. Rockstar Games still aims for a spring 2025 launch, but insiders suggest a fall 2025 release is more likely, with a delay to 2026 also possible. 

Applied Materials (AMAT)

Applied Materials (NASDAQ:AMAT), one of the stocks upgraded by analysts recently, is a leading provider in the semiconductor and display equipment industry, specializing in manufacturing solutions for the fabrication of semiconductor chips, flat panel displays, and related industries. 

Earlier this week, JPMorgan (NYSE:JPM)analysts highlighted Applied Materials as a top pick in the semi sector with a strong Buy rating and a price target of $260. The recommendation is based on anticipated positive impacts from TSMC’s capital expenditure and ASML’s orders, suggesting a beneficial environment for Semiconductor Process Equipment. 

One of the most closely-watched research firms on the Street emphasized Applied Materials’ strong positioning to capitalize on secular growth opportunities in the industry, such as High Bandwidth Memory (HBM), Advanced Packaging, Gate-All-Around (GAA) technology, and Backside Power solutions. 

This strategic positioning is expected to lead to market share gains and drive earnings power to approximately $11 per share in a semiconductor equipment market projected to reach $110 billion by calendar year 2025.

Also, Applied Materials has recently outpaced financial forecasts for its first quarter, showcasing a robust performance. As a leader in semiconductor equipment manufacturing, the company reported earnings of $2.13 per share and total revenue of $6.71 billion. These figures significantly exceeded analysts’ predictions, who had anticipated earnings of $1.90 per share on revenue of $6.48 billion, further underscoring the company’s strong market position and the accuracy of its strategic initiatives.

On the date of publication, Shane Neagle did not hold (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.