What is a 'Buy' rating & 'hold' rating?

Analysts bullish on a particular security will give it a "buy" rating and set a price target above the current market price. In addition, if the analyst considers the stock one of the best in the industry or sector, you'll sometimes see a "strong buy" rating attached. A "hold" rating is typically the lowest rating a sell-side analyst gives a stock.

Why do analysts use ratings?

Analysts and brokerage firms often use ratings when they issue stock recommendations to stock traders. Analysts arrive at stock ratings after they research companies’ public financial statements, communicate with executives and customers and interact with companies in other ways.

How do analysts rate stocks?

Stock ratings can range from simple “buy” and “sell” ratings to “equal weight” and “outperform” ratings. Here’s a quick overview of how analysts rate stocks. A “buy” rating indicates that an analyst is optimistic about a stock’s short-term or mid-term growth and recommends that traders purchase the stock.