Underweight Stock

An underweight Stock refers to a stock that an analyst or investor believes is expected to underperform relative to a Benchmark Index or a sector. Investors may hold less of this stock in their portfolio compared to its weight in the benchmark. For example, if a stock constitutes 5% of an index but an analyst recommends holding only 3%, that stock is considered underweight. Cases may include companies facing declining earnings or adverse market conditions, such as a tech firm experiencing slow growth while the sector overall is booming.