This Just In: Upgrades and Downgrades

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 track the long-term performance of Wall Street's best and brightest -- and its worst and sorriest, too.

And speaking of the best ...
Grand news for Boeing (NYSE: BA) investors this morning: In a flip-flop as remarkable as the turnaround taking place at its beleaguered 787 Dreamliner program, Boeing has just received a double upgrade from the market mavens at Oppenheimer.

Citing Friday's report that rising aircraft demand has sparked a production boost at Boeing, Oppenheimer argues that with an "historically high backlog" of work to be done, Boeing has positioned itself to "enjoy heretofore unrealized sustainability of aircraft production, and not just for the 'near term.'" The prospects look so bright that Oppenheimer reversed its previously bearish stance, upgrading Boeing stock all the way from "underperform" to "outperform."

That's a remarkable reversal. Oppenheimer spent most of the last nine months rating Boeing a "sell" equivalent -- and lagging the market's gains by a good 41 percentage points in consequence. But before you dismiss Oppenheimer's head-spinner as simply throwing in the towel, consider the analyst's overall record in aerospace.

Let's go to the tape
Oppenheimer has made the most picks (that we track) of biotech stocks -- and not very well. From Amgen (Nasdaq: AMGN) to Celgene (Nasdaq: CELG) to BioSante, its mistakes in this sector have been legion. But when it comes to aerospace stocks, Oppenheimer loves to fly -- and it shows:

Across the many industries it covers, Oppenheimer may have a merely middling record, guessing right only about half the time. But in aerospace, Oppenheimer's accuracy soars to better than 62%.

Oppenheimer's albatross?
Will today's striking reversal on Boeing reinforce Oppenheimer's reputation as an ace aerospace analyst? Or is Boeing the one stock within this sector that the analyst just can't pin down?

Consider that Oppenheimer began rethinking its position on Boeing after Friday's news that Boeing intend to move up its ramp-up in 777 production by six months. As of mid-2011, Boeing intends to accelerate production from five planes per month to seven. Similarly, Boeing's accelerating the ramp at its 747 program, pushing its mid-2013 deadline up to mid-2012, and jacking up production rates from one-and-a-half planes to a much more aerodynamic two complete planes per month.

Boeing said the move owed to its belief that airlines will "return to profitability" in 2011. (Delta (NYSE: DAL) and UAL (NYSE: UAUA) will surely be relieved.) The company says it's duty-bound to support its customers by shipping their planes earlier.

Oppenheimer seems to agree with the near-term assessment. Farther out, it expects Boeing it enjoy a "material competitive advantage for years to come" as its 787 program begins cranking out aircraft, making deliveries, and collecting cash.

Lest we forget ...
Faced with all this optimism, even I can't disagree that Boeing is undervalued today. But let's remember that Boeing previously muddled through more than two years of repeated flubs, timetable delays, and unfulfilled promises on the 787. Its intransigence in dealing with its own workforce resulted in a three-month work stoppage, damaging employee relations. Now, Boeing's got the pedal to the metal, trying to get the 787 out of FAA trials and into the air -- and production.

Boeing's set itself a horribly ambitious schedule, replete with the possibility of new problems cropping up between now and year's end. Any of them could kick Boeing's delivery schedule off-kilter once again and send the stock price plummeting.

Foolish takeaway
After a remarkable run, Boeing's stock price today sits 125% higher than it did one year ago. I don't think it's too far off the mark to say that a lot of the good news Oppenheimer is citing today has already been baked into the stock price.

In short, just because Boeing's prospects look bright now doesn't mean the stock itself is the best way to play those prospects -- not anymore. There are better bargains out there.