Guide
How to read and interpret stock analyst ratings
Strong Buy, Buy, Hold, Underperform, Sell — what each label really means, how the consensus is aggregated, and whether analyst ratings are actually reliable.
What is an analyst rating?
A stock analyst rating is a recommendation issued by a sell-side equity analyst — typically working at an investment bank or research firm — that summarises their 12-month view on a public company. Each analyst publishes a target price and a label (the "rating") on dozens of stocks they cover. Aggregating these labels gives the consensus rating you see on every StockBrief stock card.
The five rating levels
Brokers use slightly different wording, but almost every rating maps to one of five buckets. We use the canonical Finnhub scale, where lower scores are more bullish:
| Label | Score | What it means |
|---|---|---|
| Strong Buy | 1.0 – 1.5 | Expected to materially outperform the market and the sector. |
| Buy | 1.5 – 2.5 | Positive view, expected to outperform but with less conviction. |
| Hold | 2.5 – 3.5 | Neutral — performance broadly in line with the market. |
| Underperform | 3.5 – 4.5 | Expected to lag the market; reduce exposure. |
| Sell | 4.5 – 5.0 | Strongly negative; analyst expects meaningful downside. |
How StockBrief aggregates the consensus
For every ticker, we pull the latest consensus snapshot from Finnhub, which collects ratings from dozens of brokerages worldwide. The aggregation works in three steps:
- Collect. Every active analyst rating is fetched along with its issue date.
- Score. Each label is mapped to a numeric score (Strong Buy = 1, Sell = 5).
- Average. The mean score is converted back to a label using the buckets above and displayed next to the price.
The result is a single, easy-to-read label that summarises what dozens of professional analysts currently think about a stock.
Are analyst ratings reliable?
Analyst ratings are useful, but not infallible. Several well-documented biases are worth keeping in mind:
- Bullish skew. Across the market, Buy and Strong Buy ratings vastly outnumber Sell ratings — partly because of relationships between banks and the companies they cover.
- Slow to downgrade. Analysts often cut ratings after a stock has already fallen, not before.
- Short horizon. Most ratings target a 12-month window — far shorter than a typical long-term investor's holding period.
- Consensus > individual. A single analyst can be wrong; the consensus across many is more informative than any single call.
Use analyst ratings as one input alongside fundamentals, valuation, news flow, and your own risk tolerance — never as a standalone reason to buy or sell.
How to use ratings inside StockBrief
Every stock card on the home page and detail page shows the live consensus label. A green Strong Buy on a stock you already follow is a signal to check why — read the latest news, look at the price chart, and decide whether the thesis still matches your strategy. A red Sell on a held position is a prompt to revisit the original reason you bought, not an automatic instruction to exit.
FAQ
What does "Strong Buy" mean?
The most bullish rating an analyst can issue — they expect the stock to significantly outperform its sector over the next 12 months.
Are analyst ratings reliable?
They're a useful input, but not infallible. Consensus ratings tend to skew bullish and react slowly to bad news — best used alongside fundamentals and your own risk tolerance.
How is the consensus calculated?
StockBrief aggregates ratings from dozens of sell-side analysts via Finnhub, maps each to a score from 1 (Strong Buy) to 5 (Sell), and averages them.
What is the difference between Hold and Sell?
Hold = neutral, performance in line with the market. Sell = explicit negative call, expecting meaningful underperformance.
Educational content only — not investment advice. See our legal disclaimer.