A positive change in the rating of a security. An upgrade is usually triggered by a steady improvement in the fundamentals and financials of the entity that has issued the security. Upgrades to the credit rating of corporate issuers of debt securities are issued by rating agencies, such as Standard & Poor's.
Upgrades to investment ratings for stocks and fixed-income securities are issued by equity and bond analysts respectively at brokerage houses. In the context of portfolio management, the term "upgrade" also refers to a strategy whereby the risk profile and quality of the portfolio is improved by including blue-chips in it, while eliminating speculative stocks.
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.
An 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.