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." Today, 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.

Research in Motion -- it's just gotta be worth something, right?
This, in a nutshell, is the upshot of yesterday's Bernstein upgrade on Research In Motion (Nasdaq: RIMM). Formerly bearish on the stock, Bernstein's had a (small) change of heart on the stock, arguing that the 40% sell-off since February is overdone. The analyst thinks RIM is worth at least $40, so while it could fall a bit more, there's limited downside to today's $45 price -- and the stock is a market perform.

But is Bernstein right?

Let's go to the tape
Let's begin at the beginning: The analyst's record. Based on Bernstein's past history of successful stock picks in the communications equipment industry, yes, there's every reason to believe the analyst is right about RIM today. Over the four years we've been tracking Bernstein's performance, this analyst has developed a stellar record for 67% accuracy in comm-stocks-picking.

Bernstein's been right about JDS Uniphase (Nasdaq: JDSU) and Ericsson being better than most folks believed. It's been right about Nokia's downfall -- and more importantly, about RIM, too:


Bernstein Rating

CAPS Rating
(out of 5)

Bernstein's Picks Beating S&P by

JDS Outperform ** 59 points
Ericsson Outperform *** 43 points
Nokia Underperform *** 70 points
RIM Underperform ** 60 points

So when Bernstein comes back today and tells us, yes, we were right about RIM being overvalued back in October of '09 ... but y'all are just crazy, selling it at today's prices, well, there may be something to that. The analyst certainly has the chops to back up its opinions.

Recent news reports would also seem to support the analyst's tempered pessimism. This week, for example, we began hearing rumors that Apple (Nasdaq: AAPL) is suffering from weak-ish iPhone sales at Verizon (NYSE: VZ), and may be having trouble inking a distribution agreement with China Telecom (NYSE: CHA). At the same time, RIM announced that China Unicom (NYSE: CHU) is beginning to offer customers its BlackBerry as an alternative to the iPhone in China. Simultaneously, ace analyst RBC advised investors that BlackBerry's PlayBook tablet is selling stronger than expected -- outselling Motorola's (NYSE: MMI) first edition of the Xoom, and on pace for perhaps 500,000 unit sales this quarter.

Caveat investor
So it would seem RIM isn't RIP just yet. That said, even Bernstein isn't urging investors to rush right back into the stock. Remember -- the analyst said it expects the stock to sell for perhaps $40 in a year's time, and that's a price $5 ahead of where the shares sit today. It's also worth pointing out that while optimistic about the stock, Bernstein still maintains extreme skepticism concerning the company's management: "We nevertheless believe management remains in denial. ... We therefore do not believe it is the right time to build a position to play a structural turnaround of the company."

Foolish takeaway
In other words, all Bernstein's prepared to say in defense of RIM today is that the stock's become so cheap, there's little left to be gained by shorting it. Little reason to sell if you own it, too, because at this point, "things can't get worse in the foreseeable future."

And I find it hard to argue with that assessment. Whether you think of RIM as selling for eight times free cash flow, seven times GAAP earnings, or even 6.5 times forward earnings -- any way you look at it, the stock's shockingly cheap if RIM gets anywhere near hitting consensus growth forecasts of 13%. So while I doubt shareholders will cheer, exactly, to hear the news, Bernstein really is probably right about this one: So far down, and so long out, Research In Motion really does have nowhere to go but up.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.