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 worst ...
What do you do when one of the (ahem) somewhat-less-than-successful analysts on the planet comes out and endorses a stock you own? Do you discount the analyst's reputation, and just welcome 'em aboard? Do you dump the stock in horror upon learning who now likes it? Or do you calmly take a second look at the numbers, and see how well they match up with the analyst's assumptions?

As multiple-choice tests go, that one was pretty easy. (Leave it to a lawyer to ask a leading question.) But you get the point.

Yesterday, Brigantine Advisors recommended buying shares of Kinetic Concepts (NYSE: KCI), a stock previously recommended by the folks over at the Fool's own Motley Fool Pro service. While on its face "good news," a couple of facts suggest we should be cautious about following this particular analyst's advice: Brigantine ranks only in the top 40% of investors we track on CAPS and has a mediocre record of one win and one loss in the Healthcare Equipment and Supplies sector.

So today we're going to take a second look at Kinetic's numbers, and try to figure out whether Brigantine's ringing endorsement should sound an alarm bell for investors.

According to Brigantine, Kinetic Concepts is "a pioneer in the development of negative pressure wound therapy (NPWT) devices used to assist in the healing of acute and chronic wounds in the inpatient and post-acute care settings." Nevertheless, "KCI is transforming its business model to lower reliance on the NPWT business, with the 2008 purchase of LifeCell adding two rapidly growing regenerative tissue matrix products."

Brigantine thinks the market is underestimating the "potential upside from LifeCell," as well as the benefits to be reaped as Kinetic introduces new NPWT products and expands its business into the Japanese market. As a result, the analyst argues that the shares' "steep valuation discount versus med tech peers" is unwarranted.

The Fool says ...
For what it's worth, Motley Fool Pro, which has Kinetic Concepts in its portfolio, seems to agree with much of Brigantine's major theses. In the stock's original recommendation, Pro argued that Kinetic would be able to compete with rivals like Stryker (NYSE: SYK), Smith & Nephew (NYSE: SNN), and Johnson & Johnson (NYSE: JNJ), citing positives including "wide opportunity to expand into international markets," "innovative wound treatments," and the ability of LifeCell to "boost sales and earnings growth." Pro posited potentially 100% gains for investors who bought into Kinetic Concepts back in 2008.

Time to buy?
The problem is, Kinetic Concepts shares have nearly doubled since selling for $21 a stub back when Pro originally recommended it. Is now really the best time to be buying in, after the run-up, as Brigantine suggests?

No. I don't believe it is.

Consider: On the one hand, Brigantine has a point about the company's apparent "valuation discount." Selling for just 12 times trailing earnings, Kinetic shares seem attractive relative to peer players in its industry, which is dominated by higher-profile, higher-multiple companies like St. Jude (NYSE: STJ), Medtronic (NYSE: MDT), and Boston Scientific (NYSE: BSX), which sell for P/E ratios of 15.5, 18.7, and ... infinity (Boston Scientific is currently unprofitable).

But what if Brigantine is wrong about the growth prospects? What if we are wrong? After all, most analysts on the Street have Kinetic pegged for sub-10% growth over the next five years. With no dividend to support its valuation, a sizable slug of debt on its balance sheet, and sub-industry-average growth, I'm not convinced the stock deserves anything more than a 12-times multiple.

Sure, Kinetic has strong free cash flow, well in excess of reported earnings under GAAP. But when I factor the company's debt load into the equation, I still come up with an enterprise value-to-free cash flow ratio of 12.5 for this stock. To me, that looks in line with the headline price-to-earnings ratio. To me, that suggests the company will need to grow a whole lot faster than most people think it can, in order to justify its stock price.

Foolish takeaway
Checking my reasoning, and confirming my suspicions about the valuation, I pinged a health-care analyst to get his read. His take: Kinetic Concepts "has been the 'next great thing' for about 20 years or so now. It's a therapy with a great future in its past." Which, after a 100% run-up, pretty much sums up what's happened with the stock. From where I sit, it looks all downhill from here.

Stryker is a Motley Fool Inside Value choice. Johnson & Johnson is a Motley Fool Income Investor pick. Motley Fool Options has recommended a buy calls position on Johnson & Johnson. The Fool owns shares of Kinetic Concepts, Medtronic, and Stryker. 

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 currently ranked No. 450 out of more than 165,000 members. The Motley Fool has a disclosure policy.