What do analyst ratings mean

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TD Ameritrade, Inc. All rights reserved. Home Investing Investment Guidance. A Translator Might Help What do analyst ratings such as buy, sell, hold, and everything in between mean? By Karl Montevirgen December 9, 5 min read. Key Takeaways Understand what buy, sell, and hold analyst ratings mean Know how to read analyst ratings and translate them into something meaningful Tools that can help investors analyze the big picture in depth and breadth may be more useful than standard stock ratings.

How to View Smart Score Log in to your tdameritrade. Select View more details to see a summary of the eight factors that go into creating the Smart Score. Powerful platforms, powerful tools. Find your best fit. Start your email subscription. Recommended for you. Related Videos. ET India Inc. ET Engage. ET Secure IT. Cryptocurrency By. Stocks Dons of Dalal Street. Live Blog. Stock Reports Plus. Candlestick Screener.

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For a stock, an analyst may assign a "buy", "hold " or "sell" rating and an explanation of why they recommend this action for the stock.

When it comes to major Wall Street banks and institutions, they all use different terminology and classifications. Morgan Stanley, for example, uses the terms "overweight", "equal-weight", and "underweight". The timeline for its ratings is 12 to 18 months. Credit Suisse uses the terms "outperform," "neutral", and "underperform", which is based on a month time period.

All of these terms are variations of the "buy", "hold", and "sell" ratings. For a bond, a rating agency will assess the bond's relative safety based upon the issuing entity's fundamental financial picture, which scrutinizes the issuer's ability to repay the principal and make interest payments.

Moody's is a provider of international financial research on government and commercial issued bonds. Moody's utilizes a rating system to judge a borrower's creditworthiness.

This rating scale goes starts at Aaa being of the highest quality and goes to C being of the lowest quality. Fitch Ratings is also a credit rating agency that is international.

This agency bases its ratings on factors such as how sensitive a company is to internal changes and the kind of debt the company holds. Fitch is used by investors as a guide to what investments will not default and will, in turn, lead to a solid return.

The ratings assigned by the various rating agencies are based primarily upon the insurer's or issuer's creditworthiness. This rating can, therefore, be interpreted as a direct measure of the probability of default.

However, credit stability and priority of payment are also factored into the rating. Morgan Stanley. Credit Suisse. Accessed Dec. Moody's Investors Service. Fitch Ratings. Fixed Income Essentials. Your Privacy Rights. To change or withdraw your consent choices for Investopedia.