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 ...
By all rights, today should have been a good day for Hologic (Nasdaq: HOLX) investors. Their company just reported revenue growth. It reduced costs. It reversed last year's massive $9.01-per-share loss and produced an $0.08 per share profit for the fiscal second quarter of 2010. So, why's the stock down about 10%?

Two words
Two words explain the sell-off: Brean Murray. The ace Wall Street banker downgraded Hologic stock from "buy" to "hold" this morning, warning that: "Despite the stabilization of the capital equipment market, we are concerned that the company's exposure to the domestic unemployment rate is just starting to show its strain on the revenue line." And if Brean's nervous about that, then perhaps investors are right to panic.

After all, this is no run-of-the-mill Wall Street hack warning of a slowdown at Hologic. To the contrary, our stats show that Brean's actually one of the best investors, ranking in the top 6% of investors we track. And Brean's particularly good in the health-care equipment field, where more than 60% of its active recommendations are currently outperforming the market. Stocks like:


Brean Says:

CAPS Rating
(out of 5)

Brean's Picks Beating
S&P by:

Intuitive Surgical (Nasdaq: ISRG)



59 points

Orthovita (Nasdaq: VITA)



46 points

Mindray Medical (NYSE: MR)



38 points

(Nice choices, by the way.) Plus, Hologic seems to have condemned itself by its own words, which support Brean's negative opinion of the company. Updating investors on what to expect as the year progresses, Hologic predicted yesterday that it would book no more than $420 million in sales during the current, third fiscal quarter, and no more than $1.67 billion over the course of this year. If that's the way things truly play out, therefore, we're looking at just 4% growth this quarter, and 2% -- at best -- this year.

Best scenario, therefore: Growth will continue to be slow, and only get slower. Slow this quarter, like last. Slower this year than this quarter.

So it sure sounds like Brean is right on the money ... except for one thing.

Growth and value
The problem with Brean's analysis, it seems to me, is that it overlooks the fact that even without amazing, barnburner growth, Hologic's stock already looks pretty attractive. Although the company has not yet updated us on second-quarter cash flow, the most recent data we do have to work with shows Hologic generating free cash flow at a rate in excess of $500 million per year.

Call me a crazed optimist if you like, but paying 9.3 times free cash flow sounds like a good deal to me even if Hologic fails to grow at all this year. The fact that the company thinks it can manage single-digit growth in 2010, and perhaps climb back into the double digits in years to come, has me thinking that today's sell-off is just a tiny bit overdone.

Foolish final thought
And it's not just me. Turns out, at the same time as Brean was downgrading its shares of Hologic, the folks over at Needham & Co. were reiterating their long-term confidence in the stock. While technically, Needham's "hold" rating mirrors that of Brean Murray, Needham also had a bit of pithy advice for long-term shareholders: "Investors holding shares of [Hologic] should have a long term horizon and be patient as [Hologic] launches new products that may impact growth beginning in [fiscal 2011]. We encourage long term investors to add to positions on weakness."

And the CAPS community of investors appears to be heeding that advice. Right now, they're collectively scoring Hologic as a "four-star" stock -- not the best bargain on the planet, perhaps, but possibly a worthy holding for your portfolio. I'm with them on this one.

Intuitive Surgical, Mindray Medical, and Orthovita are Motley Fool Rule Breakers choices.

Fool contributor Rich Smith has no interest, short or long, in any company named above. You can find him on CAPS, publicly pontificating under the handle TMFDitty, where he was recently ranked No. 655 out of more than 160,000 members. The Motley Fool has a disclosure policy.