This Just In: More 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." While the pinstripe-and-wingtip crowd is entitled to its opinions, we've got some pretty sharp stock pickers down here on Main Street, too. (And we're not always impressed with how Wall Street does its job.)

Given that, perhaps we shouldn't be giving virtual ink to "news" of analyst upgrades and downgrades. And we wouldn't -- if that were all we were doing. Fortunately, 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. 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 ...
For the second time in as many weeks, Research In Motion (Nasdaq: RIMM) has won itself a fan. Last week, we discussed the buy rating that Hudson Securities issued on the stock. Today, let's turn our attention to the latest vote of confidence -- from Gleacher & Co.

Now, Gleacher wouldn't normally qualify for the "best" title. (So far, the analyst has only climbed as high as the 60^th percentile among investors tracked on CAPS.) But that owes more to the analyst's recent entree onto the scoreboard. Gleacher has only been making its stock picks public for about nine months now, but it's already off to a pretty strong start ...

... averaging two S&P 500-outperformers for every single losing bet it makes (a much better record than Hudson sports, I'd add.) So why does Gleacher believe Research In Motion will become its next winning bet? I'll answer in two words: Microsoft (Nasdaq: MSFT) and Nokia (NYSE: NOK).

Help! We've fallen, and we can't get up!
Good sports will tell you that it's unkind to kick a rival when he's down -- but business consultants would add that in fact, that's probably the safest time to kick 'im. In similar vein, Gleacher argues that Nokia's phase-out of its Symbian operating system in favor of Windows Phone 7 could cost Nokia as much as 10% of the sales it would have made had it not allied with Mr. Softie. If Research In Motion decides to swoop in and scoop up some of these would-be Nokia customers, Gleacher believes RIM could sells as many as 2 million to 4 million extra smartphones in fiscal 2012 -- and add as much as $1 billion to fiscal 2012 revenues.

But what about Google?
Excellent question. As I mentioned last week, it's mainly the fear that Apple (Nasdaq: AAPL) and Google (Nasdaq: GOOG) are going to carve up the smartphone market between them that has investors so pessimistic about Nokia's chances, and RIM as well (and conversely, so optimistic about Motorola Mobility (NYSE: MMI) as it rides the Android's coattails.)

Gleacher's view, though, is that as Motorola, Samsung, HTC, and all the other 'droids out there vie with each other for market share, competing mainly on price as they sell similarly OS-ed phones, RIM will enjoy some measure of pricing power from the fact that it has its own OS, that no one else can offer. RIM loyalists, therefore, have only one place to shop. Gleacher believes this will help RIM maintain about a 35% to 40% gross margin on its products, and help the company earn as much as $7.10 next fiscal year -- about 5% above consensus targets.

Foolish takeaway
Last week I outlined why I believe RIM shares, selling for just 10.5 times earnings (and about 11.4 times free cash flow, are attractively priced relative to consensus growth expectations. If Gleacher's right, though, and the stock could grow its profits even faster than expected, then that would only strengthen the case for buying RIM today.

In short, last week we saw a poor analyst recommending RIM at a great valuation. Now we have a smart analyst saying the stock's even cheaper than it looks -- and I'm more optimistic about RIM than ever.