What Are Analyst Ratings? Definition and Example
What “buy”, “outperform” and “overweight” actually mean, why most ratings are buys, and how to read one without being misled.
Key takeaways
- An analyst rating is a sell-side analyst’s published view of a stock, usually buy, hold or sell, often meaning “expected to beat, match or trail” a benchmark or the analyst’s coverage list.
- Buy ratings dominate: in Exent’s data, 71.1% of ratings over the last 12 months were Buy, 26.1% Hold and 2.8% Sell (statistics as of June 24, 2026).
- “Buy”, “Outperform” and “Overweight” are usually the same top tier under different firm vocabularies.
- A rating is a relative view, not a personal recommendation and not a promise of gains.
What does a “buy” rating mean?
A buy rating means the analyst expects the stock to do better than a reference point over their forecast horizon. The reference varies by firm: the market, the sector, or the other stocks the analyst covers. It usually comes with a price target.
How do rating scales work?
| Tier | Common labels | Usual meaning |
|---|---|---|
| Top | Buy, Outperform, Overweight, Strong Buy | Expected to beat the reference |
| Middle | Hold, Neutral, Equal-weight, Market Perform | Expected to roughly match it |
| Bottom | Sell, Underperform, Underweight | Expected to trail it |
US broker-dealers must publish their rating definitions and the share of stocks in each tier under FINRA Rule 2241. Bank-by-bank labels are in what “overweight” means.
Example: how lopsided ratings are
Across 161,987 ratings in Exent’s data over 12 months, 115,185 were Buy and 4,536 were Sell, about 25 buys for every sell. A Hold therefore often reads as a mild negative in practice. Reasons are covered in why analysts rarely say sell.
Why it matters for a self-directed investor
Because buys are the default, the rating alone carries little information. Who made the call matters more: see theanalyst rankings by past accuracy, and the consensus is more useful when you can see its spread.
Common mistakes
- Treating “buy” as a personal instruction: it is a view on the stock, not on your portfolio.
- Comparing labels across firms without checking their definitions.
- Counting buys without checking the analysts’ track records.
See analyst ratings ranked by accuracy with Exent
- Stocks Radar tracks thousands of Wall Street analysts and ranks them by past accuracy.
- Gems flag stocks where several top‑rated (4★+) analysts agree.
Frequently asked questions
At most firms, yes: outperform is the top or second tier and expects the stock to beat its reference. Check the firm’s published definitions to be sure.
In one large ratings dataset, 71.1% of ratings issued over 12 months were Buy, 26.1% Hold and 2.8% Sell, as of June 24, 2026.
Some firms and data sites use strong buy as a tier above buy. Aggregators also use it to describe a consensus where nearly all analysts rate the stock a buy.
Get the picks Wall Street’s best analysts agree on.
Exent tracks 4,000+ analysts, keeps only the elite few with proven records, and surfaces the Gems where they agree.
Educational content, not investment advice. Examples are illustrative; past performance does not guarantee future results.