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." Here, we'll show you whether those bigwigs actually know what they're talking about. To help, we've enlisted Motley Fool CAPS to track the long-term performance of Wall Street's best and worst.

Speaking of which ...Over the past two weeks, JDS Uniphase (Nasdaq: JDSU) investors have watched in shock and dismay as their company lost more than a quarter of its market cap. When Ciena (Nasdaq: CIEN) disappointed on earnings, and Finisar (Nasdaq: FNSR) issued scary guidance earlier this month, the "pin action" that ensued was of the negative variety. JDS, Oclaro, and Alcatel-Lucent all came tumbling down. But fear not, JDS shareholders -- at least one Wall Street analyst is still hot for your stock. Best of all, it's Stifel Nicolaus.

Long regarded as one of Wall Street's best analysts, Stifel ranks in the top 2%-3% of analysts we track on CAPS. Stifel's especially strong in the field of Communications Equipment manufacturers, where 73% of its active recommendations are currently outperforming the market -- including, by the way, JDS Uniphase itself.

What can go wrong?
So if Stifel is insisting it still likes JDS, what could possibly explain JDS shares' 5.5% fall today? Over on StreetInsider.com, analysts hypothesize that "communication equipment companies might be reacting to the G-7's move to shore up the yen." But I've got a different theory.

Even as Stifel reiterated its "buy" rating on JDS, the analyst knocked more than 12% off its price target for the stock, dropping it to $28. Warning that Japan's current difficulties could sap demand for optical communications equipment, Stifel fears that "end market demand will slow.

That said, you may have noticed that even after today's sell-off, JDS shares still only cost $19 (and change.) So if the stock costs $19.40, but Stifel thinks it's worth $28, there's still a chance for a 44% one-year profit, right? That's not quite as good as the 65% profit we'd expect if Stifel had left its price target intact, but 44% is still pretty darn good.

Except for one thing: It's bunk.

Valuation matters
I don't challenge recommendations from this very sharp banker lightly, but to me, the numbers at JDS Uniphase simply don't support Stifel's "buy" thesis.

Even after today's sell-off, the stock currently sells for more than 339 times trailing earnings. While I admit that the company's projected 15% growth rate is good, it's not 339-times-earnings-good. I also admit, by the way, that JDS's GAAP earnings don't tell the whole tale about this stock. Valued in the most favorable light, on its free cash flow, JDS's price drops to a somewhat more palatable 52 times free cash flow. But even this price seems exorbitant.

Given my druthers, if investing in the communications equipment arena, I'd much rather own a slower grower like Cisco (Nasdaq: CSCO), at 10.5 times FCF. Heck, I'd even buy Akamai (Nasdaq: AKAM) (upgraded by Stifel yesterday) before considering JDS for a purchase. While too expensive by far at a P/FCF ratio of 28, Akamai still offers a near-50% discount to JDS's valuation.

How a smart analyst like Stifel Nicolaus can recommend a stock -- any stock -- at the price JDS shares charge is frankly beyond me.

Akamai Technologies is a Motley Fool Rule Breakerschoice. The Fool has created a bull call spread position on Cisco Systems. Motley Fool Alpha owns shares of Cisco Systems.

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. 541 out of more than 170,000 members. 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.