When an analyst gives a stock an outperform rating, it is an indication that the analyst expects the stock to beat the market or market index for that stock. In some cases, it may mean that the stock will outperform other stocks in its sector which may be defined by market capitalization, industry, or other characteristics. For example, the Invesco QQQ is an exchange-traded fund (ETF) that is an index fund for technology stocks that trade on the NASDAQ stock exchange. If the fund is up 8%, but Facebook (FB) is up 10%, Facebook would be said to be outperforming the market by two percentage points.
Like many ratings, the outperform rating can have different names depending on the analyst. Other names include: market outperform, overweight, or strong buy. In some cases, an analyst may not have an outperform rating and will simply rate the stock as a buy.