Accumulate (Analyst Recommendation)

Definition

The term accumulate is used to identify the stocks a sell-side analyst believes will perform slightly better than the overall market in the near term.  Accumulate is considered a buy recommendation; although it is not considered vitally important for an investor to hold this security in a portfolio of stocks.

Explanation

Sell-side analysts are responsible for generating periodic research reports for their clients.  These reports highlight recent company news, as well as projections of future earnings developed through the use of proprietary models.  While these reports contain a lot of detail, they also contain a summary recommendation.

Analyst recommendations are not standardized, but they can be generalized.  Accumulate is a buy recommendation, but not a strong one.  Accumulate is the equivalent of recommendations such as: Long-Term Buy, Moderate Buy, Industry Outperform, Market Outperform, Overweight and Add.  The analyst is essentially telling the investor the company's stock is expected to outperform the market over the next twelve to twenty-four months.

Related Terms

buy-side analyst, sell-side analyst, hold, underperform, strong buy, strong sell