When issuing stock recommendations, brokers and analysts may use the same terminologies but may differ in the meaning of the recommendations.
For example, a “Buy” rating — as opposed to “Strong Buy” — may mean that the stock is “projected to increase in value in a longer-term duration”, while “Strong Buy” may mean that the stock will “appreciate in value in the next 12 months”.
For some brokers, an “Outperform” recommendation may carry a 15% upside potential while a similar “Outperform” recommendation by a different broker might refer only to a 10% price appreciation.
Let’s cite actual brokers and compare and contrast their ratings and recommendations.
CitisecOnline (COL)
Buy. Over the next six to twelve months, the share price is expected to increase by 15% or more.
Hold. Over the next six to twelvemonths, the share price is expected to move within a range of +/- 15%.
Sell. Over the next six to twelvemonths, the share price is expected to decline by more than 15%.
Credit Suisse
Outperform. The stock’s total return is expected to exceed the industry average by at least 10-15% over the next 12 months.
Neutral. The stock’s total return is expected to be in line with the industry average (range of +/-10%) over the next 12 months.
Underperform. The stock’s total return is expected to underperform the industry average by 10-15% or more over the next 12 months.
Deutsche Bank
Strong Buy. Deutsche Bank’s best picks, backed with high degree of confidence. Expect significant outperformance of the stock against the market. The time to act to buy the stock is now.
Buy. The stock is expected to outperform the market by 10% or more over the next 12 months.
Market Perform. The stock will broadly perform in line with the market over a 12-month period and the share price is likely to trade within a range of +/-10%.
Underperform. The stock is expected to underperform the average market performance by 10% or more over the next 12 months.
Goldman Sachs
Recommended List. Over the next 6-18 months, the stock is expected to provide price gains of at least 10 percentage points greater than the market.
Trading Buy. Over the next 6-9 months, the stock is expected to provide price gains of at least 20 percentage points.
Market Outperformer. Over the next 6-18 months, the stock is expected to provide price gains of at least 5 to 10 percentage points greater than the market.
Market Performer. Over the next 6-18 months, the stock is expected to provide price gains similar to the market.
Market Underperformer. Over the next 6-18 months, the stock is expected to provide price gains of at least 5 percentage points less than the market.
JP Morgan
Overweight. The stock is anticipated to outperform the average total return of stocks in analyst’s coverage universe over the next 6-12 months.
Underweight. The stock is anticipated to underperform the average total return of stocks in analyst’s coverage universe over the next 6-12 months.
Neutral. The stock is anticipated to perform in line with the average total return of stocks in analyst’s coverage universe over the next 6-12 months.
Merill Lynch
Buy. Expected total return of 10% or more for low and medium volatility risk securities within 12-month period from date of initial rating; 20% or more for high volatility risk securities
Sell. Negative return.
Neutral. 0-10% expected total return for low and medium volatility risk securities within 12-month period from initial date of rating; 0-20% for high volatility risk securities.
UBS
Strong Buy. Greater than 20% excess return potential; high degree of confidence.
Buy. Positive excess return potential.
Hold. Low excess return potential; low degree of confidence.
Reduce. Negative excess return potential.
Sell. Greater than 20% negative excess return potential; high degree of confidence.
Wells Fargo Securities
Buy. Stock is expected to outperform the general market over next 12-18 months. Immediate purchase is recommended.
Sell. Stock has reached stated price objective and appreciation has been achieved or certain company fundamentals have changed warranting investors sell the stock to avoid price decline.
Hold. Stock has moved out of preferred buying range, but there is further upside to share price or stated objectives at time of purchase have changed and share appreciation may take another 6-12 months. Holding the stock is recommended.
