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...

Ford Motor Company (NYSE:F) stock is off to the races this morning, shooting up more than 4% in the first few minutes of trading -- a big change from the 14% loss in stock value that investors have endured over the past 12 months. For this, you can thank the friendly analysts at Morgan Stanley.

This morning, you see, Morgan Stanley announced a big upgrade on Ford stock, reports StreetInsider.com (subscription required). The reason: From yesterday's closing price of less than $11 a share, Morgan Stanley believes Ford stock could rise nearly 40% over the next 12 months.

Here's what you need to know.

Ford F-150 pickup

Ford is more than just the F-150 -- but even the F-150 may be more than enough to lift Ford stock. Image source: Ford Motor Company.

Two thumbs up for Ford stock

Morgan Stanley did a 180 on Ford this morning, spinning its wheel all the way from underweight to overweight and assigning Ford a new $15 stock price. And far from discouraging the analyst, Ford's weak stock performance over the past year may be the thing that's encouraging Morgan Stanley to place a bet on Ford.

According to Morgan Stanley, Ford's sagging stock price leaves its stock currently selling for a discount to the value of just one of Ford's multiple product franchises. "We calculate the value of the F-150 franchise may be worth more than 150% of the company's enterprise value," says Morgan Stanley. And Ford's F-250s, its F-350s, its Focuses, Mustangs, Explorers, and Transits -- heck, its entire Lincoln brand?

Pay what Ford stock costs today, and you get all those things for free.

Ford math

It's a pretty bold claim that Morgan Stanley is making -- but perhaps not quite as extreme as it appears on its face.

Traditionally, enterprise value is calculated by taking a company's market capitalization, subtracting its cash on hand, and adding its long-term debt. In Ford's case, with $44.5 billion in market cap, $26.5 billion in cash, but $154.3 billion in debt, this would work out to an enterprise value of $172.3 billion on Ford stock. It would imply that Morgan Stanley is valuing the F-150 brand at nearly $260 billion in enterprise value!

Sure, the F-150's good. (It's the best-selling pickup truck in America for a reason.) But perhaps not quite a quarter-trillion dollars good.

Luckily, Morgan Stanley's argument may not be as extreme as it sounds. More likely, Morgan Stanley is using a more conservative estimation of enterprise value, factoring into its enterprise value calculation not Ford's entire debt, including more than $90 billion in long-term debt from vehicle sales financing, but only the automotive debt attributable to Ford's automobile-manufacturing operations. According to data from S&P Global Market Intelligence, this debt amounts to only $12.6 billion, resulting in an enterprise value of $30.6 billion for Ford stock (and an implied value of about $46 billion for the F-150).

Rounding up Ford's parts

Still, if $46 billion is what Ford's F-150 is worth, and $30.6 billion is what all of Ford currently costs, then it stands to reason there's a lot of upside left in Ford stock today as the market ascribes more value to Ford's other products. Moreover, on top of all the other car and truck franchises Ford holds, Morgan Stanley sees value in the company's growing automotive usage "data" business, in potential cost savings from restructuring, and also simple growth potential as automotive sales climb out of a trough and return to peak levels at some time in the future.

As Morgan Stanley estimates it, every 5% rise in "US SAAR" (that's the seasonally adjusted annualized rate of car and truck sales in the U.S.) boosts Ford's profits by 16%. For that matter, every 5% rise in F-150 sales alone should suffice to boost Ford's profits by 10% -- which suggests that Ford's weak unit sales of cars and trucks last month may not be as bad news for Ford investors as they appeared, given that F-series pickups saw a 3.5% uptick in sales.

At a stock price still less than six times annual profits, now might be a good time to take Morgan Stanley's advice and buy some Ford stock yourself.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Ford. The Motley Fool has a disclosure policy.