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.

But not only the best and worst ...
Every so often, we get a chance to feature on upgrade or downgrade from an analyst that's entirely new (or nearly so) to investors, and today is one of those days, as we examine a new buy-rec from "financial advisory services" provider Burrill & Co. According to the stock ratings aggregators at StreetInsider.com, Burrill's only been publishing recommendations since about November of last year, and has only published a handful to date. But this morning, it published a big one.

The age of personalized medicine is upon us, you see. Biotech start-ups are developing new ways to treat illnesses -- and new drugs to treat them -- specific to the patients' varied needs. And according to Burrill, one company you should give especial attention to is Navidea Biopharmaceuticals (NAVB 22.81%).

According to Burrill, Navidea is in the process of seeking regulatory approval for a new agent called Lymphoseek, "a precision radiopharmaceutical agent used for intraoperative lymphatic mapping" that could win approval as early as late April. Burrill says the agent targets a market $300 millionwide, and when combined with "in-licensed" products NAV4694 and NAV5001, the company's total market opportunity approaches $1.5 billion. According to Burrill, the company's building a whole "pipeline" of diagnostic products "which can help usher in an era of personalized treatments for indications of large unmet medical need."

Potential, and peril
Sound good so far? Well, before you get too excited, here's what Burrill isn't telling you about Navidea: It's got a bit of an "unmet need" of its own. Namely, Navidea needs to raise cash -- and quick.

At last report, Navidea had about $11 million cash on its balance sheet, versus $6 million in debt. Worse, unprofitable Navidea is currently burning cash at the rate of $26 million a year. If things keep going this way, the company is could have more debt than cash on its books within just three months. Within six months, its bank account could be bone dry.

Hoping to avert a cash crunch, Navidea has made several moves involving warrants and convertible preferred stock to try and get hold of some cash. The details are contained mainly in SEC filings from the past couple of months, and it's not entirely clear yet how much cash they have yielded. (We'll know more when the company's next earnings statement comes out, not long from now). What is clear, though, is that many of the moves that Navidea is making have the potential to dilute current shareholders -- so even if Lymphoseek does prove to be a success, it's not certain that the company's current shareholders will benefit.

Foolish final thought
The potential for profit from the rise of personalized medicine attracts a lot of investors. But it's important not to overlook the risks inherent in buying the cash-burning companies that are trying to make this revolution happen. Indeed, an investor doesn't have to look much farther than Dendreon (NASDAQ: DNDN) -- poster boy for personalized cancer treatment, and for cash-burning companies alike -- to see how badly these bets can go awry.

Unable to hit sales targets last year, or fulfill the promises of Wall Street analysts, Dendreon has come up a bit from its lows of 2012, but still sells for less than half what it's shares fetched a year ago. (Find out more in this Fool video).

So, what's the solution? My Foolish colleague Selena Maranjian thinks the best way to hedge your bets in the volatile biotech sector, yet still participate in the profits from personalized medicine, may be to invest in "a little bit of everything" -- buy an ETF that owns part of all the major players. That way, you may not participate entirely when the next big thing hits. But neither will you go broke if it misses. Selena suggests proffers the PowerShares Dynamic Biotech & Genome ETF (PBE -0.29%) as one good place to start.

Fool biotech analyst Brian Orelli has an even more specific suggestion: Instead of putting all your eggs in one profitless and cash-burning egg-basket like Dendreon or Navidea, or hoping that an ETF -- the contents of which you're not quite sure of -- will keep you safe, buy shares of a bigger, more stable company like Abbott Labs (ABT -3.03%) or Myriad Genetics (MYGN -1.48%). As Brian notes, both companies are developing tests to confirm how specific drugs will work upon specific patients -- an integral part of personalized medicine.

More importantly, both stocks sport valuations that while not exactly cheap, are at least reasonable. Abbott, at eight times trailing earnings, is the better "value" candidate, even if it's only expected to grow earnings at the rate of a percent or two per year over the next five years. Myriad, at a bit less than 20 times earnings, but growing at 15%, is the "growth stock" option in this pair.