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." While Wall Street is entitled to its opinions, we've got some pretty sharp stock pickers down here on Main Street, too.

In "This Just In," we don't simply tell you what the analysts said. We also show you whether they know what they're talking about. With help from Motley Fool CAPS, we track the long-term performance of Wall Street's best and brightest -- and its worst and sorriest, too.

How smart was this move?
Elsewhere today, I discuss Standpoint Research's recent initiation of coverage on Amgen (Nasdaq: AMGN), and why I disagree with the analyst's advice to buy that stock. Here, we'll turn our attention to the stock that Standpoint tossed in Amgen's favor: Pfizer (NYSE: PFE). This time, I think the analyst is right on the money in removing its endorsement.

On Monday, Standpoint cashed in its chips on Pfizer, an investment that has outperformed the S&P 500 by 11 percentage points since the analyst recommended it back in April 2009. Standpoint gave brutally frank reasons for closing its position:

PFE shares are up 61% since our April 27, 2009 recommendation ... and we are quite pleased that PFE was able to beat the S&P for us in a rising market. The shares hit a three-year high today and we are no longer comfortable leaving our highest recommendation attached to this name. ... We got what we wanted out of this name and are moving on.

Declare victory and go home
Standpoint reaped big gains by betting big on Pfizer in the depths of the Great Recession. Now that the stock costs too much, it's time to declare victory and go home.

Admittedly, this is a controversial decision. Even Standpoint admits that Pfizer stock can be called "attractive at 9X estimates for 2011 & 2012 with a 4% dividend." But let's take a quick look at how these numbers stack up to a few of Pfizer's peers:


Forward P/E

5-Year Projected Growth Rate

Dividend Yield

Mylan (NYSE: MYL) 9.7 14.2% -
GlaxoSmithKline (NYSE: GSK) 9.6 4.2% 6.4%
Eli Lilly (NYSE: LLY) 9.5 (6%) 5.6%
Pfizer 8.7 3.1% 4.1%
Teva Pharma (Nasdaq: TEVA) 8.6 14.3% 1.8%
Merck (NYSE: MRK) 8.4 5.4% 4.6%

As you can see, based on what Pfizer's expected to earn in the immediate future, the stock stacks up well against more expensive alternatives like Mylan, Glaxo, and Lilly. On the other hand, Pfizer's dividend "yields" a lot of ground to two of these rivals in generosity. And when you compare Pfizer to the two companies it beats in the contest for cheapness, Pfizer loses to Teva on growth rates, and to Merck on dividend yield.

Heck, Pfizer may not even grow at all. As Standpoint points out, "revenues are actually forecast to decline in 2012 to $63 [billion] from $67 [billion] in 2011."

About the kindest thing Standpoint can say about Pfizer today is that the stock "may still be a suitable hold for those under-weight [health care stocks] and/or with a high-beta portfolio requiring some low-beta hedges."

I agree. Pfizer is going nowhere fast.

A better health-care idea
One of the great benefits of writing this column, for yours Fool-y, is that in the course of turning over rocks to examine the stocks Wall Street picks, I often turn up entirely new bargains. And it won't take you too long staring at the table above to figure out which stock I prefer over Pfizer today: Teva Pharmaceuticals.

Although the company's dividend yield doesn't exactly impress, Teva's ultra-low P/E ratio and stellar growth rate more than make up for that defect. In fact, I've liked Teva for quite some time, and its bargain-basement price has always been a prime motivator for me. What's more, in reviewing Standpoint's previous stock picks, I notice that Teva is also a favorite of this analyst, and the only Big Pharma pick the analyst's currently underwater on -- giving small investors like you and me a chance to pick the stock up at a big discount to what the analyst thought was an already good price. To top it all off, at last report Teva was continuing to run a free cash flow surplus, significantly in excess of the "net income" it reports under GAAP.

My advice: Follow Standpoint's lead on Pfizer, and exit, stage left. But rather than replacing it with Amgen, take a look at Teva instead. I think you'll like what you find.

Pfizer is a Motley Fool Inside Value recommendation. GlaxoSmithKline is a Motley Fool Global Gains selection. The Fool owns shares of GlaxoSmithKline and Teva Pharmaceutical Industries.

Fool contributor Rich Smith does not own (nor is he short) shares of any company named above. You can find him on CAPS, publicly pontificating under the handle TMFDitty, where he's currently ranked No. 486 out of more than 170,000 members. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.