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What Is Overweight? Key Takeaways Overweight is an outsized investment in a particular asset, asset type, or sector within a portfolio. Overweight, rather than equal weight or underweight, also reflects an analyst's opinion that a particular stock will outperform its sector average over the next eight to 12 months.
Portfolio managers may overweight a stock or a sector if they think they will perform well and boost overall returns. Pros May increase portfolio gains, returns Hedges against other overweight positions. Cons Reduces portfolio diversification Exposes portfolio to more risk overall.
Compare Accounts. Because ratings terms vary from firm to firm, the guide is designed to help investors understand the meaning behind each rating where available and to allow them to make comparisons between each firm's recommendation. Some brokerages turned down MarketWatch's requests for their rating descriptions.
For analysts' current ratings changes and other research click here. Sectors carry weightings of overweight: Expected to outperform the broader market averages; market weight: Expected to equal performance of broader market averages; underweight: expected to underperform broader market averages. Measure ad performance.
Select basic ads. Create a personalised ads profile. Select personalised ads. Apply market research to generate audience insights. Measure content performance. Develop and improve products. List of Partners vendors. Financial analysts give their opinions of the future performance of a security. They can give performance ratings of underweight, overweight, or market perform to a security. If analysts give a stock an overweight rating, they expect the stock to outperform its industry in the market.
Analysts may give a stock an overweight recommendation due to a steady stream of positive news, good earnings, and raised guidance. Stock analysts are employed by investment firms whereby they are charged with evaluating the financial performance of a company.
As a result of the analysis, the investment analyst makes a recommendation for the equity or stock, which is typically a buy, sell, or hold recommendation. However, the ratings that stock analysts provide are more involved than simply a buy or sell rating.
Below are the three most common ratings provided by stock analysts:. Typically, an overweight rating on a stock means that an equity analyst believes the company's stock price should perform better in the future.
However, it's important that investors understand the benchmark that the equity analyst is comparing the stock's performance to when issuing the rating. In other words, an overweight rating on a stock means that the stock deserves a higher weighting than the benchmark's current weighting for that stock. Retired: What Now? Personal Finance. Credit Cards. About Us. Who Is the Motley Fool? Fool Podcasts. New Ventures.
Search Search:. Updated: May 8, at PM. Image source: Getty Images.
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