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. Outperform

    Outperform is an analyst recommendation that a stock is expected ...
  4. Analyst Sponsorship

    Analyst sponsorship is when one or more investment analysts from ...
  5. Performance Shares

    Performance shares are stocks issued to executives and managers ...
  6. Investment Analyst

    An investment analyst is a financial professional with expertise ...
Related Articles
  1. Investing

    Analyst Recommendations: Do Sell Ratings Exist?

    Analyst reports can be an investor's best friend - but without knowing how to read them, you won't be able to fully utilize them.
  2. Personal Finance

    Sizing Up a Career as a Ratings Analyst

    This ratings analyst field is lucrative, but do you have what it takes to score this job?
  3. 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.
  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

    3 Suggestions Before Reading Analyst Stock Recommendation

    Discover the true motivations and priorities of sell-side analysts and why individual investors should ignore consensus estimates for earnings and revenues.
  6. Investing

    A Day in the Life of an Equity Research Analyst

    What does an equity research analyst do on an everyday basis?
  7. 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.
  8. Personal Finance

    Career advice: Financial analyst versus data analyst

    Learn the distinctions between financial analysts and data analysts, and determine which career is right for you based on your skill set and interests.
  1. What is the difference between a buy-side analyst and a sell-side analyst?

    The main difference between a buy-side analyst and sell-side analyst is the type of firm that employs them and the people ... Read Answer >>
  2. 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 >>
Trading Center