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 its worst and sorriest, too.

And speaking of the best ...
In one of yesterday's weirder pieces of stock news, Citigroup downgraded shares of data storage specialist EMC (NYSE: EMC) on fears that "the current consensus view (and guidance) does not capture the incrementally more challenging demand environment."

I don't know about you, but this Fool had a hard time parsing that statement on first reading. Let's take it word by word: "Incrementally" = "a little bit more." "Challenging" = "not good." "Demand environment" = "IT buying." Put it back together, and now I think I get what Citi is trying to say: "IT buying is getting a bit worse."

Well, duh
We're in a recession, folks. Of course IT departments aren't buying as much. But in the same statement in which Citi dissed EMC's prospects, the analyst also admitted that "the company's diversification efforts have repositioned EMC to much more effectively withstand a sustained downturn." What's more, Citi still thinks the shares will top $17 within a year -- 20% higher than where they closed last night.

This deserves a downgrade?
Well, "deserves" may be too strong a word. "Excuses" is more like it. As in: I think Citi is using the above dense prose as an excuse, a smokescreen, for exiting a position that has cost it 15 points' worth of market underperformance over the past seven months. Citi's had enough pain and is ready to call it quits.

It's not the first time the analyst has bailed on an ill-timed call. Far from it. Reviewing a few of its more high-profile "buy" evacuations of recent months, we find:

Company

Citi Said:

CAPS Says (5 Max):

Upon Exit, Citi's Pick Lagged S&P by:

Silicon Labs

(Nasdaq: SLAB)

Outperform

****

6 points

Wachovia (NYSE: WB)

Outperform

**

14 points

Coach (NYSE: COH)

Outperform

****

27 points

Blue Nile (Nasdaq: NILE)

Outperform

***

32 points

Southwest Airlines

(NYSE: LUV)

Outperform

**

34 points

MBIA (NYSE: MBI)

Outperform

*

74 points

Hey, everybody makes mistakes
Absolutely right, and I don't want to be too hard on Citi here. For one thing, the analyst is one of the better Wall Street investing houses, and also one of the better investors generally, as scored by CAPS. Citi's 88.75 CAPS rating puts it within spitting distance of the top 10% of investors.

Still, when it comes to EMC, I have to wonder whether Citi is cutting bait just before landing a winner. I understand the reluctance to stick with a losing position and the desire to just close it out and forget it ever existed, but EMC is finally starting to look attractive to me.

Sure, the stock's price-to-earnings ratio of 19 looks a mite pricey, especially when most analysts don't expect growth to exceed 13% per year over the next five years. But if you look a little closer, I think you'll find that with free cash flow verging on $2.2 billion, this stock is trading just a whisker over 13.5 times its trailing free cash flow.

Foolish takeaway
EMC isn't yet a screaming buy, but if it can grow free cash flow at that same 13% rate for earnings, it looks mighty appealing to me. A marquee-name company like EMC, and a leader in its field, could easily fetch a lot more. And if it does fetch 20% more one year from now, as Citi predicts, I'll bet this analyst will be kicking himself for having downgraded today and not holding on to his optimism just a little bit longer.

Don't make the same mistake.

Fool contributor Rich Smith does not own shares of any company named above. You can find him on CAPS, publicly pontificating under the handle TMFDitty, where he's ranked No. 1,718 out of more than 96,000 players. The Fool has a disclosure policy.