what is an upgrade 
an upgrade refers to the positive change in an analyst s outlook of a particular security s valuation based primarily on that security s improving fundamentals understanding an upgradean upgrade to a specific security assigns it a higher ranking and is usually triggered by qualitative and quantitative information that contributes to an increase in the financial valuation of that security in the context of portfolio management the term upgrade also refers to a strategy whereby the risk profile and quality of the portfolio are improved by including blue chips in it while eliminating speculative stocks upgrades to investment ratings for stocks and fixed income securities are issued by equity and bond analysts at their respective brokerage houses upgrades to the credit rating of corporate issuers of debt securities are issued by rating agencies such as standard poor s for example a rating agency may upgrade the credit rating of an issuer from aa to aaa such a move would have a positive effect on all outstanding bonds and other fixed income instruments of the issuer example of an equity upgradean example of an equity upgrade would be an analyst raising the investment rating for a particular stock or sector to buy from hold an upgrade of this nature would sometimes be accompanied by an upward revision in the analyst s target price for the stock for equity and debt securities an upgrade generally leads to positive press behind the scenes the biggest benefit to an upgrade is a lower cost of capital for both debt and equity a lower cost of capital translates into a lower discount rate which leads to a higher valuation and firm valuation similar to how an individual might be able to borrow at a cheaper interest rate after a credit score upgrade businesses can access the capital markets more often and at cheaper rates after a positive upgrade event beyond an outright upgrade event credit rating agencies and equity valuation shops both publish watchlist or similar lists indicating securities or companies prime for an upgrade or downgrade investors and creditors alike keep a close eye on potential directional changes to a security or business prospect 