This Just In: More Upgrades and Downgrades

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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." While the pinstripe-and-wingtip crowd is entitled to its opinions, we've got some pretty sharp stock pickers down here on Main Street, too. (And we're not always impressed with how Wall Street does its job.)

Given this, perhaps we shouldn't be giving virtual ink to "news" of analyst upgrades and downgrades. And we wouldn't -- if that were all we were doing. Fortunately, in "This Just In," we don't simply tell you what the analysts said. We also show you whether they know what they're talking about.

Today, we'll be looking at one analyst's bullish call on SINA (Nasdaq: SINA  ) and then turn to some significantly less optimistic news and views on FuelCell, Halliburton (NYSE: HAL  ) , NVIDIA (Nasdaq: NVDA  ) , and Seagate (NYSE: STX  ) -- basically, everybody but SINA.

SINA's of the times
Investors are shrugging off this morning's SINA upgrade (to outperform) from Oppenheimer, and rightly so. Unprofitable from the perspective of GAAP, even the free cash flow at SINA has been waning lately. Last year, the company barely broke even on free cash flow, producing only about $11 million, and far below par for the past five years. This year, management is warning of "weak" revenue growth at its portal ads business, and telling investors they'll have to wait for the second half to see any real improvement.

Speaking of which, even if SINA manages to return to form, its five-year average of $74 million annual free cash flow would still leave the stock trading for nearly 48 times FCF. That's no bargain price, Fools, and anyone following Oppenheimer's advice is bound to get burned.

Energy crisis
The news gets no better as we turn to our next two picks. This morning, Halliburton got hit by a pair of target price reductions. First Barclays cut Halliburton to $56, then FBR Capital -- already at $55 -- decided Barclays' pessimism didn't go far enough, and lopped off a further 10%. Behind all the bad news is a curious note from Halliburton itself, which warned yesterday that the high cost of an obscure agricultural commodity known as "guar gum," used as a blending additive to fracking fluids, is going to have an outsized effect on Q2 profits.

To hear Halliburton tell it, this single hiccup in its supply chain could be responsible for as much as a three-percentage-point decline in the company's profit margin. And this comes on top of previous guidance warning that margins would contract by at least two percentage points. Put it all together, and it looks like investors could see Halliburton's historic profit margin of 11% get cut in half in Q2.

Granted, at a P/E of only 9, this bad news may already be baked into the share price. Granted, too, if the bankers are right and Halliburton's shares really are worth at least $50 -- gummed-up profit margins and all -- investors willing to stick with Halliburton could enjoy 70% profits over the course of the next year.

I only wish I could say the same about FuelCell Energy. With no profits to speak of, and none expected next year either, Ardour Capital's decision this morning to cut 30% off its price target for FuelCell is entirely understandable. The only illogical part of this news is that even as Ardour loses faith in the profit potential, it's still recommending buying FuelCell.

Never end on a down note
Last but not least, we come to two stocks that appear to have a much brighter future, regardless of what Wall Street thinks of 'em. In recent weeks, we've spoken a lot about analysts' increasingly negative view of the personal computer industry. This morning, that negative spin caught up with semiconductor maker NVIDIA, and hard drive manufacturer Seagate -- and sent both stocks tumbling.

At NVIDIA, FBR Capital cut its price target by 10% (to $18), while at Seagate, it was Needham & Co, wielding the ax, and slicing the target by 19%, to $42 a share. And what can I say? I disagree with both actions strongly.

At 15 times earnings, an even lower price-to-free cash flow ratio, but 16% long-term growth, NVIDIA looks clearly undervalued to me. (And don't even get me started on NVIDIA's $3 billion in net cash.) I like the stock. I own the stock. Enough said. (Of course, if you do want more details about why NVIDIA is a nice stock to own, feel free to download our free report on the subject -- right here.)

As for Seagate, well, I'm not quite so optimistic about the stock as some other Fools I could name. For one thing, unlike NVIDIA (and also unlike rival Western Digital (NYSE: WDC  ) ), I'd point out that Seagate currently isn't generating quite as much free cash flow as it reports for net income. Still, it's hard to resist a rock-bottom P/E of 5. Wall Street may be cooling on its prospects, but personally, I like the stock just fine.

Whose advice should you take -- mine, or that of "professional" analysts like Oppenheimer and Ardour, FBR, and Needham? Check out my track record on Motley Fool CAPS, and compare it to theirs. Decide for yourself whom to believe.

Fool contributor Rich Smith owns shares of NVIDIA, but he holds no other position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool owns shares of Western Digital. Motley Fool newsletter services have recommended buying shares of Halliburton, SINA, and NVIDIA. Motley Fool newsletter services have recommended writing puts on NVIDIA. The Motley Fool has a disclosure policy.

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

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