DEFINITION of 'Market Perform'

Market perform is an investment rating used by analysts when the expectation for a given stock or investment is that it will provide returns in line with those of the S&P 500 or other leading market averages. Market perform is a neutral assessment of a stock and is neither strongly positive or negative. If, however, the stock has gone through a period of market underperformance, it is an indication that the stock is expected to improve its performance relative to market averages.

BREAKING DOWN 'Market Perform'

The phrase "market perform" tends to be a fairly lukewarm recommendation overall. A preferred investment vehicle would be one that is expected to outperform, or do better than, leading market averages. A "market perform" rating can be equated to such ratings as "hold" or "peer perform".

Market Perform and the Language of Analysts

Ratings vary from firm to firm. Some firms simply do not use market perform as a rating, and those that do may be providing recommendations based on different timeframes. A market perform from analysts of one firm may mean market average returns for 12 months while another firm's analysts are using 6 months or 3 months. Some analysts give recommendations for a much longer period of time, even up to 24 months, but these are usually meant to be read with a range. For example, a market perform with a long range may mean the stock will be within 10% of the market average over those 24 months. Of course, there is a lot of difference between being 10% above average and 10% below the average. 

The two most powerful analyst calls are buy and sell. Research has shown that buy recommendations are slightly more powerful in the market overall and they can accelerate a stock. The sell recommendation can lead to some acceleration, but it is most pronounced when a stock is already disliked by the market. Market perform sits between these two polar opposites, and that results in it being read as one or the other. As mentioned, a market perform can seem like damning a stock with faint praise and this is especially the case when the analyst moves from a past buy recommendation to a market perform. This is seen as an analyst not quite ready to give the sell signal, but well on the way to it. It works the other way if the past recommendation was a sell. When the next recommendation is a market perform, some people read it as a tentative buy.

  1. Strong Sell

    If a company is expected to dramatically underperform, it may ...
  2. Strong Buy

    A strong buy is a type of recommendation given by analysts for ...
  3. Analyst Expectation

    An analyst expectation is a report indicating how a particular ...
  4. Covered Stock (Coverage)

    A covered stock is a stock for which a sell-side analyst publishes ...
  5. Asset Performance

    Asset performance refers to a business' ability to take operational ...
  6. Analyst Sponsorship

    A positive endorsement that an analyst makes regarding a company's ...
Related Articles
  1. Investing

    What You Need To Know About Financial Analysts

    Thinking about relying on analyst recommendations for your next trade? We'll show you what to watch out for.
  2. Investing

    Find Hidden Stock Gems That Analysts Ignore

    Just because it doesn't get a lot of coverage, doesn't mean a company isn't a great find.
  3. Financial Advisor

    Career advice: Financial analyst versus research analyst

    Read an in-depth comparison between a career as a financial analyst and a career as a research analyst, including advice on which one to choose.
  4. Investing

    How to Evaluate Stock Performance

    Learn how to evaluate stock performance. While what you look for in a stock could be different from another person, the way you analyze performance is the same.
  5. Investing

    Should Investors Listen To Analyst Recommendations?

    Analysts cannot predict future events with absolute certainty any better than you can.
  6. Personal Finance

    A career as financial analyst or business analyst?

    Understand the key distinctions between a financial analyst and a business analyst, including starting pay and job outlook.
  7. Investing

    Misconceptions About Past Performance And Future Returns

    Relying on an investment's past performance to guide your investment decisions is a losing strategy. Find out why.
  8. Personal Finance

    Career advice: Financial analyst versus equity analyst

    Understand the subtle distinctions between financial analysts and equity analysts, and learn the pros and cons of each career.
  9. Insights

    Earnings Forecasts: A Primer

    Learn how this key metric is calculated and how it is used to judge market performance.
  1. Why do analysts sometimes give an overweight recommendation on a stock?

    Learn more about analysts' ratings and why financial analysts may give a stock an outperform recommendation based on positive ... Read Answer >>
  2. What's the difference between absolute and relative return?

    Knowing whether a fund manager or broker is doing a good job can be a challenge for some investors. It's difficult to define ... Read Answer >>
Hot Definitions
  1. Leverage

    Leverage results from using borrowed capital as a source of funding when investing to expand the firm's asset base and generate ...
  2. Financial Risk

    Financial risk is the possibility that shareholders will lose money when investing in a company if its cash flow fails to ...
  3. Enterprise Value (EV)

    Enterprise Value (EV) is a measure of a company's total value, often used as a more comprehensive alternative to equity market ...
  4. Relative Strength Index - RSI

    Relative Strength Indicator (RSI) is a technical momentum indicator that compares the magnitude of recent gains to recent ...
  5. Dividend

    A dividend is a distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders.
  6. Inventory Turnover

    Inventory turnover is a ratio showing how many times a company has sold and replaces inventory over a period.
Trading Center