Underperform

In general, this means to do worse than some particular benchmark. Mutual Fund XYZ is said to underperform the S&P500 if its return falls short of the S&P500 return. However, this language does not take risk into account. That is, one might have a lower return than the benchmark in a particular year because of lower risk exposure. Underperform is also a term used by analysts to describe the prospects of a particular company. Usually, this means that the company will do worse than its industry average. Related: outperform.

Underperform

A broker's or brokerage firm's rating of a security. Such a security is expected to do marginally worse than the market as a whole for the period of time it holds the "underperform" rating. Some firms call the rating "market underperform" "moderate sell" or "weak hold." Different firms have different rating systems, but "underperform" is usually one rating above "sell" and one rating below "market perform" or "neutral." For example, if the market is expected to rise slightly, but a certain company's fundamentals are thought to be slightly weaker than the rest of the market, a brokerage firm might change that company's rating from market perform to underperform.

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References in periodicals archive

Since then, the stock has underperformed other larger-cap BP companies by 890 basis points.

Wells Fargo Upgrades Mohawk Industries On Valuation

Several studies show that heavily traded portfolios, which accelerate the realization of capital gains, significantly underperform lower-turnover portfolios on an after-tax basis.

Once again, don't believe everything you hear

Ming Hsun Lee reiterated an Underperform rating on Nio with a $3 price target.

BofA: Nio Faces 'Weak' Orders, Stiff Competition And High Refinancing Risk

9 August 2011 - Credit Suisse has hiked its rating on Swedish industrial machinery group Sandvik AB (STO: SAND) to "outperform" from "underperform", while downgrading bearing maker SKF AB (STO: SKF B) to "underperform" from "neutral".

-Credit Suisse revises ratings on Sandvik, SKF

Cheuvreux keeps 'underperform' on Novartis after Alcon takeover

(ADPnews) - Oct 19, 2009 - The analysts of Merrill Lynch lowered their stance on the stock of telecoms provider Telekom Austria AG (WBAG:TKA) to "underperform" from "buy", news agency Bloomberg reported on Monday.

Merrill Lynch downgrades Telekom Austria to "underperform"

So, the conclusion has to be that, in general, most firms underperform the market, while fees have gone up dramatically.

Are performance fees justified?

Ike Boruchow maintained an Underperform rating on Fossil Group with an unchanged $8 price target.

Wells Fargo: Fossil Group May Have Little To Celebrate In The Holiday Quarter

AB InBev (BUD) upgraded to Hold from Underperform at Jefferies with analyst saying the company is pivoting to growth while concerns on its leverage are easing.

Fly Intel: Top five analyst upgrades

-BofA downgrades SCA to "underperform"