Understanding some stockbrokers rhetoric
Can you please explain the stockbrokers definitions of stocks you list in your afternoon report. eg Overweight, Underweight, Neutral, Outperform etc etc. Thanks again for all your content.
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Answer
Hi Ross,
A good question – a glossary on the MM Website would be helpful I suspect.
- Underweight, underperform, sell – all mean sell. The analyst thinks the stock will trail the markets return over the next 12 months.
- Neutral, market weight, hold – means the analyst is so-so on the stock at current levels. They think it will trade inline with the market. There are nuances here, and corporate teams don’t like analysts putting sells on a stock given it cuts them off from getting any corporate work out of the company. I’m a cynic, and to me a hold is more or less a sell unless the hold is simply on valuation grounds rather than quality.
- Overweight, Outperform, Buy – all mean buy. The analyst thinks the stock will beat the markets return over the next 12 months.
Hope that helps
