When a stock is rated "overweight", what does it mean?

When a Wall street analyst rates a company’s shares as “overweight”, is it a good thing? Or a bad thing?

Are there other ratings of this ilk? (like “underweight”?)

Tha analyst is advising you to buy more than you would otherwise buy.

It’s not the stock that is overweight but the portfolio of which it is a part. So your ideal portfolio might be 25% each of stocks in energy, consumer goods, transport and finance. Or 25% each in US, UK, European and Asian stocks. If you believe one sector will do better than the others - but you still want to spread your risk - you will allow the ratio to become inbalanced in favour of that one sector. EG, 30% in energy stocks and 17.5% in each of the others. Thus you are now “overweight” in energy stocks.

Same applies in a big fund comprising (say) 100 different companies’ stocks. You might normally have a limit - EG no one company’s stock can account for more than 2% of the portfolio. But you might make an exception for a stock you think will do really well, and let it account for (say) 4%. Then you’re overweight in that stock.

It means ‘we’ve bought a ton of it because we think it’ll do well’ - or (if ‘overweight’ is used as a verb) ‘you should etc’.