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.