Analyst ratings differ from firm to firm as each makes use of its own ratings system. Different brokerages often use similar ratings systems, but a “buy” rating from two firms could mean very different things. For example, suppose Bank of America Merrill Lynch and Davenport Securities both have a “buy” rating on a given company. Merrill Lynch’s “buy” rating would be its top rating, however Davenport Securities’ “buy” rating would be its second highest rating. For this reason, it is important to review the analysts’ price target relative to the stock’s current price.

Below is the ratings from some of the larger, more popular firms. You don’t have to memorize the ratings below. The idea is that after reading through them, you’ll get a general idea of how the ratings scales work. Some firms focus more on valuation, some on appreciation, some on time, and others on catalysts. Nevertheless, there is a similarity between all the ratings systems.

A.G. Edwards

Buy = A total return is anticipated in excess of the market’s long-term historic annual rate (approximately 10%).
Hold = A neutral rating to hold the shares.
Sell = Stock should be sold.

BB&T Capital Markets

Strong Buy = A total return potential greater than 25 percent.
Long-Term Buy = A total return potential greater than 10 percent but less than 25 percent.
Hold = A total return of 0 percent.
Underweight = A total return of less than 0 percent.

Banc of America

Strong Buy = The most bullish rating, expected to really beat the S&P 500 by a lot.
Buy = The second most bullish rating, expected to slightly beat the S&P 500.
Market Performer = Expected to perform in-line with the S&P 500.
Underperformer = Expected to perform worse than the S&P 500.

Barrington Research

Strong Buy = Expected to outperform the S&P 500 over the next six months.
Accumulate = Expected to outperform the S&P 500 over the next 12 months.
Market Perform = Expected to perform in-line with the S&P 500.
Sell = Expected to underperform the S&P 500.

Buckingham Research

Strong Buy = Expects stock to go up more than 25% within the next 6 to 12 months.
Accumulate = Expects stock to go up 15% to 25% within the next 6 to 12 months.
Neutral = Expects stock to perform in-line with the S&P 500.
Swap = Expects stock to underperform the S&P 500 over the next 6 to 12 months.

Craig Hallum

Buy = Expects stock to rise 20% or more over the next 12 months or longer.
Neutral = Expects stock to perform in-line to slightly better than the S&P 500.
Sell = Expects stock to drop -10% or more over the next 12 months or longer.

Credit Suisse

Outperform = Expects stock to outperform the S&P 500 by 10% to 15% or more over the next 12 months.
Neutral = Expects stock to perform in-line with the S&P 500.
Underperform = Expects stock to underperform the S&P 500 by -10% to -15% or more over the next 12 months.

Deutsche Bank

Strong Buy = Expects stock to significant outperform the S&P 500.
Buy = Expects stock to outperform the S&P 500 by 10% or more over the next 12 months.
Market Perform = Expects stock to perform in-line with the S&P 500.
Underperform = Expects stock to underperform the S&P 500 by -10% or more over the next 12 months.

Piper Jaffray

Strong Buy = Expects stock to significantly outperform the S&P 500 over the next 6 to 12 months. A good catalyst exists that should power the stock higher.
Outperform = Expects stock to outperform the S&P 500 over the next 12 to 18 months.
Market Perform = Expects stock to perform in-line with the S&P 500 over the next 6 to 12 months.
Underperform = Expects stock to underperform the S&P 500 over the next 6 to 12 months.

Wachovia Securities

Strong Buy = Good catalyst should power the stock higher. Big upside potential exists. Should really outperform the S&P 500 over the next 3 to 6 months.
Buy = Stock has good valuation. Improving fundamentals should help it outperform the S&P 500 over the next 6 to 12 months.
Hold = Do not take on a new position. Existing investors should hold position. Company is fairly valued. No catalysts currently exist.
Sell = Stock is overvalued. Fundamentals are weak or getting worse.

Wedbush Morgan

Strong Buy = Expects stock to significantly beat the S&P 500 over the next 3 to 6 months.
Buy = Expects stock to beat the S&P 500 over the next 6 to 12 months.
Long-Term Attractive = Expects stock to slightly outperform the S&P 500 over the next 12 to 18 months.
Hold = No new position should be put on. Existing investors should hold the stock. Expects stock to perform in-line with the S&P 500.
Sell = Expects stock to underperform the S&P 500.

Wells Fargo

Buy = Expects stock to outperform the S&P 500 over the next 12 to 18 months.
Hold = Expects stock to have further upside movement, but it is out of the preferred buying range.
Sell = Stock has reached price target or company fundamentals have changes so investors should sell the stock.

William Blair & Company

Outperform = Expects stock to outperform the S&P 500 over the next 12 months.
Market Perform = Expects stock to perform in-line with the S&P 500 over the next 12 months.
Underperform = Expects stock to underperform the S&P 500 over the next 12 months.

<< Back to Glossary Index