Every day, Wall Street analysts upgrade some stocks, downgrade others, and "initiate coverage" on a few more. But do these analysts even know what they're talking about? Today, we're taking one high-profile Wall Street pick and putting it under the microscope...

It's been about half a year now since Russian internet giant Yandex (NASDAQ:YNDX) inked a deal to absorb Uber's ride-hailing business in Russia and neighboring countries. On Thursday, Yandex got its reward.

Specifically citing Yandex's move into ride-hailing and take-out food delivery in its recommendation, this morning, investment banker JPMorgan announced it is giving Yandex stock an overweight rating and a $47 price target -- $10 more than Yandex stock costs today. What is it about Yandex's new businesses that that makes JPMorgan so optimistic?

Read on and find out.

Image source: Getty Images.

Eating Uber's lunch

Perhaps the most obvious point in Yandex's favor is the deal that it struck with Uber last year -- and consummated just yesterday. In a press release, Yandex reacquainted investors with the terms of its deal with the American ride-hailing service:

In exchange for contributing just $100 million cash and its own Yandex.Taxi business, Yandex will acquire 59.3% majority ownership of the combined business, valued at $3.8 billion, and install the Yandex.Taxi CEO as boss of the merged entity. Meanwhile, Uber's putting in twice as much cash ($225 million), its own Russian and neighboring taxi businesses, and also its UberEATS meal delivery service -- and getting only a 36.9% stake in the company in return.

It's a lopsided deal heavily favoring Yandex, and guaranteeing the Russian partner the majority of the profits going forward. It's also a key reason JPMorgan likes Yandex. In a write-up on its new rating covered by StreetInsider.com (subscription required) this morning, the analyst highlights Yandex's new "strength in taxi and food delivery," alongside "cost synergies" from the merger as promising long-term earnings-per-share growth for Yandex.

This echoes, by the way, a hike to Yandex's price target announced by Deutsche Bank last month. Citing "meaningful upside" to Yandex stock, Deutsche values Yandex.Taxi alone at $12 a share -- implying it makes up nearly a third of the value of Yandex's $37 stock today. What's more, Deutsche believes the parent company's shares could grow to reach $50 within a year, producing as much as a 35% profit for new buyers today.

For that matter, Deutsche even predicts that Yandex.Taxi alone could be worth $50 by 2023.

What comes next

Are these reasonable expectations for Yandex stock? And is it worth the price? Most analyst predictions for Yandex don't go out nearly as far as 2023, but here's what we do know:

According to data provided by S&P Global Market Intelligence, Yandex earned $0.34 per share last year. It's expected to report 35% year over year growth and per-share profits of $0.46 when it releases full-year 2017 earnings on Feb. 15. These profits are then expected to more than double in 2018 (with Uber's business absorbed) to $1.01 per share, then grow another 45% in 2019, and 62% in 2020 -- by which time Yandex could be earning as much as $2.36 per diluted share.

One way to look at Yandex is as a company trading for 81 times trailing earnings today, which seems very expensive for 35% growth. Another way -- the analysts' way -- is to project out strong growth in earnings, and recommend Yandex as a stock that can be bought today for just 16 times what it might be earning three years from now -- at which time, by all indications, the stock will still be growing very strongly indeed.

Recommending Yandex today, JPMorgan is making a bet on extremely rapid growth for Yandex over the next three to five years. It's also making a bet that Yandex will not repeat the negative earnings growth rates that have been more common for Yandex over the past three to five years.

Whether that's a smart bet or not, we should know as early as next week.

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Rich Smith has no position in any of the stocks mentioned. The Motley Fool recommends Yandex. The Motley Fool has a disclosure policy.