3 mid-cap stocks that analysts love heading into earnings season

January 04, 2024 at 07:00 AM EST

time to buy mid-cap stocks.

The beginning of a new year also means that a new earnings season is right around the corner. Every earnings season seems "the most important earnings season" for investors. But when every stock is important, it's hard to focus on the important stocks.

One way to help you filter out the noise is to look at stocks being upgraded by analysts. And not just one or two analysts but multiple analysts. MarketBeat provides a Most Upgraded Stocks tool that lets you see which stocks receive the most upgrades.

An added benefit to this tool is the ability to filter the list based on specific criteria such as market capitalization. There is a belief among many investors that small-cap and mid-cap stocks stand to be among the biggest winners if the stock market rally gets legs. With that in mind, here are three mid-cap stocks that a significant number of analysts have upgraded in the last 90 days.

A Leader in Zero Trust Identity Security

CyberArk Software (NASDAQ: CYBR) develops, markets, and sells software-based security solutions and services focused on identity security. CyberArk focuses on creating a Zero Trust environment with its Identity Security Platform – the industry's most comprehensive platform to secure human and machine identities.

CyberArk has received 11 upgrades in the past 90 days, and CYBR stock is up 39%. The CyberArk analyst ratings on MarketBeat give CYBR stock a consensus price target of $202.96. That's about 6% below the price on January 3, 2024. However, the analysts who have issued upgrades in the last 30 days give the stock much higher price targets.

They may be right. CYBR stock dropped to a level of support of around $211 to kick off the new year. That may have been due to short selling since short interest in the stock has risen about 5% in the last month. Additionally, institutions own over 90% of the stock, and selling has outpaced buying about 2-to-1 in the past year.

Demand for technology stocks, particularly cybersecurity stocks, isn't going to diminish, and CyberArk is providing solutions in what is a critical area for businesses of all sizes. In its November earnings report, 91% of the company's quarterly revenue was recurring. And the company's annual recurring revenue (ARR) is expected to rise in 2024.

Investing in Two Emerging Themes

GitLab (NASDAQ: GTLB) develops software for companies engaged in software development (DEV) and IT operations (Ops). The company is best known for its GitLab platform, which "helps companies manage the growing complexities of developing, securing, and deploying software."

DevOps will be critical to the growth of Web 3.0. That growth will come from building artificial intelligence (AI) into software development. That's an area where GitLab excels.

GTLB stock has received nine upgrades in the last 90 days. The stock was up over 34% at that time. GitLab is exhibiting some of the same price action as CyberArk. That is, the consensus price target of $61.80, based on the GitLab analyst ratings on MarketBeat, is only about 6% higher than the stock's current price.

However, in the last 30 days, analysts are raising their price targets. GTLB stock has fallen back about 10% since December 28, 2023, putting the stock at a support level from February 2023. The company won't report earnings until March, meaning the stock may trade in a range. But favorable earnings could push the stock to $70 or even higher.

Analysts Ratings May Put a Floor Under the Correction in WING Stock

Wingstop (NASDAQ: WING) is the only stock on this list with a consensus rating of Hold. However, eight analysts have upgraded the stock in the last 90 days, and the recent price action in the stock was predictable. WING stock jumped to around $260 during the Santa Claus rally. Since then, it's pulled back over $10.

There are two stories. On the one hand, TD Cowen reiterated the stock's Buy rating on December 18 and gave the stock a $275 price target. On the other hand, that price target is an outlier, suggesting that investors may not want to chase this stock higher.

As is frequently the case, earnings may be the tiebreaker. Wingstop reports earnings at the end of February. Investors will look for the company to continue its pattern of beating on the top and bottom lines year-over-year. That will be tougher in 2024 than it was in 2023. But if it does, WING stock should be ready to move higher.

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3 mid-cap stocks that analysts love heading into earnings season

A Leader in Zero Trust Identity Security

Investing in Two Emerging Themes

Analysts Ratings May Put a Floor Under the Correction in WING Stock

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