At The Motley Fool, we poke plenty of fun at Wall Street analysts and their endless cycle of upgrades, downgrades, and "initiating coverage at neutral." So you might think we'd be the last people to give virtual ink to such "news." And we would be -- if that were all we were doing.
But in "This Just In," we don't simply tell you what the analysts said. We'll also show you whether they know what they're talking about. To help, we've enlisted Motley Fool CAPS, our tool for rating stocks and analysts alike. With CAPS, we'll be tracking the long-term performance of Wall Street's best and brightest -- and worst and sorriest, too.
And speaking of the worst ...
I come bearing bad tidings for Apple (Nasdaq: AAPL ) shareholders today: Thomas Weisel likes your stock.
Oh, I know that getting an upgrade from a Wall Street firm is ordinarily cause for rejoicing in Investor-land. I know that investors have already bid up Apple shares on today's news. But the sad fact remains that the investors who bought Apple because this analyst upgraded it to "out-per-form" are gravely ill-in-formed about Thomas Weisel's competence.
Here's why
Over the 20 months that we've been tracking its picks on Motley Fool CAPS, Thomas Weisel has ranked in the bottom 20% of investors. The analyst is wrong nearly twice as often as it's right, and its average pick underperforms the market by about 10%. Of course, some recs perform worse than others ...
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Company
|
Thomas Weisel Said:
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CAPS Says
(5 max):
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Thomas Weisel's Pick Lagging S&P by:
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|
F5 Networks (Nasdaq: FFIV )
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Outperform
|
****
|
51 points
|
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Zebra Technologies (Nasdaq: ZBRA )
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Outperform
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***
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9 points
|
|
Agilent Tech (NYSE: A )
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Outperform
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***
|
6 points
|
|
Genentech (NYSE: DNA )
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Outperform
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*****
|
2 points
|
... F5, for instance. And admittedly, the analyst does get some things right. On certain financial-services stocks, for example, Thomas Weisel performs quite respectably:
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Company
|
Thomas Weisel Said:
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CAPS Says
(5 max):
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Thomas Weisel's Pick Beating S&P by:
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|
Western Union (NYSE: WU )
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Outperform
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*****
|
7 points
|
|
Automatic Data Processing (NYSE: ADP )
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Outperform
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****
|
7 points
|
Unfortunately, until Apple announces the advent of iBucks at the 2020 Macworld Conference (part of Steve Jobs' master plan to make the U.S. dollar obsolete), Apple remains much more of a tech firm, like the four losers named above. Given Thomas Weisel's track record with tech stocks, that's not comforting to this Fool. Thomas Weisel tells us that Apple will grow its revenue at 24% per year over the next five years, earn "above-peer operating margins" on that revenue, and accelerate its gains in market share. I trust you'll understand why I view these predictions with more than a little skepticism.
Foolish takeaway
Thomas Weisel's endorsement of the stock is indeed unfortunate, but in this Fool's opinion, it should not dissuade you from owning Apple stock. The analyst price target of Apple is much higher than the current price, showing that analysts believe the company has more promising prospects.
That, plus the fact that Apple now carries the Motley Fool Stock Advisor stamp of approval, tells me you won't go too far wrong picking up a few shares at these levels.
Just don't go backing up the truck yet on Thomas Weisel's say-so. We're not there just yet.
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