This Just In: 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." So you might think we'd be the last people to give virtual ink to such "news." And we would be -- if that were all we were doing.

But 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'll be tracking the long-term performance of Wall Street's best and brightest -- and its worst and sorriest, too.

And speaking of the best ...
Almost three months ago to the day, I poked a bit of gentle fun at the expense of equity analyst Lazard Capital. Observing the firm "seemingly slapping 'buy' ratings on every" solar power-related company it could get its hands on -- from Energy Conversion Devices (NASDAQ:ENER) to Evergreen Solar (NASDAQ:ESLR), First Solar (NASDAQ:FSLR) to Sunpower (NASDAQ:SPWR), I pointed out that it had somehow missed one: Motley Fool Rule Breakers recommendation Suntech Power (NYSE:STP).

I don't know whether I hit a nerve, or if perhaps Lazard was just waiting for the stock to slide a bit in price (as it has over the past month). Whatever the reason, Lazard saw the light yesterday, and initiated coverage on Suntech as well, adding it to its buy list. Driving the point home, Lazard dropped me a note yesterday, containing a "digest of an Initiation report" on Suntech, explaining why the "second-largest independent solar manufacturer" deserves a place in your portfolio. Lazard cited the firm's "capacity ramp, technological enhancements, cost reductions, strategic silicon sourcing, effectively leveraging benefits of China-based manufacturing, and strong management" as arguments in Suntech's favor, and dismissed recent margin compression as a short-term concern.

You asked for it
OK, Lazard. I can take a hint. You want some attention for tapping Suntech, you got it. But you may wish you had checked out your CAPS rating before reaching out to me with your buy report. Now that I've got the endorsement in hand, I'm duty-bound to look at Lazard's overall record, so that investors know the context in which to place the recommendation. Here goes:

Lazard Capital Markets

• CAPS score: Negative-102 points
• CAPS rating: Under 20 (meaning the firm places in the bottom quintile of all players)
• Accuracy: 44% -- worse than when we last checked in.

Egads. So exactly what picks has Lazard been making that give it a sub-Jim Cramer rating, and a record for accuracy worse than a flipped penny? Picks like these:

Sound familiar? Yep, those are two of the stocks Lazard tapped while in the midst of its dervish-inspired upgrading of the solar sector back in March. But there's good news, too! Among the firm's winners we find two of Lazard's other favorite solar finds ...

... and also two of the kinds of picks that I mentioned back in March that we would like to see more often:

At the risk of repeating myself
I hate to pick on a firm that's done me the favor of sending its ratings right to my email inbox. It smacks of biting the hand that feeds me (story ideas.) But facts are facts, and the fact is that Lazard just doesn't do that well at picking stocks to buy. While it got two of its March solar picks right, it got the other two wrong -- and the two wrongs outweighed the two rights, dragging Lazard's CAPS ranking down in the process.

On the other hand, what I said back in March remains true today: On those rare occasions when it pans a stock, Lazard does a superb job of calling the downturns. Of its eight underperform ratings that we're tracking, six are in the green for Lazard as of this writing -- including the two biotech bombs noted above, Osiris and Human Genome Sciences. Seems to me Lazard has found something it's good at. Would that it did more of it.

Why do we at Motley Fool Rule Breakers like Suntech, notwithstanding the fact that laggard Lazard likes it, too? Try out the service for 30 days -- for free -- and find out.

Fool contributor Rich Smith does not own shares of any company named above. You can find him on CAPS, publicly pontificating under the handle TMFDitty, where he's currently ranked 458 out of more than 30,000 rated players. The Fool has a disclosure policy.