Investors often have access to the best minds on Wall Street without even knowing it most of the time, and this is a critical piece of information everyone should keep track of to reverse engineer what analysts are suddenly becoming bearish on. When Wall Street analysts decide to upgrade a stock’s rating and valuation, it usually pays to attempt to understand the decision and its reasoning.

Spotify: Subscription-Based Businesses Will Win in 2025

Goldman Sachs should boost a company like Spotify entering 2025, as their macro outlook report did point out potential tail risks in the broader S&P 500 due to high valuations. This means that investors will likely want to rotate their capital into companies that offer more stable and predictable financials.

This is where Spotify stock comes into play. As most of its revenue comes from subscriptions and is, therefore, recurring, both investors and Wall Street analysts can safely and accurately predict the company’s financials into the future and value the stock accordingly.

Right along with this double-digit EPS growth potential is the new Goldman Sachs buy rating, placed in January 2025 alongside a $550 valuation for Spotify stock. To prove these new views right, investors would have to ride the company higher by as much as 20% from today’s prices.

CrowdStrike Stock Rounded Up New Fans

Analysts at Goldman Sachs weren’t the only ones to express their optimism about CrowdStrike stock recently; those from State Street decided to boost their institutional holdings by 2.9% as of November 2024. After this new allocation, the group’s net position reached a high of $2.7 billion, or 3.9% ownership in the company.

This new valuation would mean the stock needs to rally by as much as 19% from today’s price, giving investors a lot to consider moving forward into 2025. This stock is as attractive today as ever because of the way the world economy is moving now.

As more business is done online and everyone’s information is stored in company databases, companies like CrowdStrike—providing cybersecurity services—become key to future economic growth.

Patterson-UTI Energy: A Buffett Bet Is Never a Bad Bet

The advantage for retail investors is that they can invest in smaller companies, such as Patterson-UTI, which has a market capitalization of only $3.3 billion. A company this small would be way out of Buffett’s sphere, or any other institutional buyer, for that matter, but not for retail investors.

Because it is at the forefront of the industry’s value chain, it is set to get paid first and see the benefits of EPS growth before all other peers.

This is why Goldman Sachs analysts felt so comfortable placing a $10 per share valuation on this stock along with a Buy rating as of December 2024. This new view means up to 18% upside for investors.

The article "Why Goldman Sachs Just Upgraded These 3 Stocks and What It Means" first appeared on MarketBeat.