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'll 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 ...
Nearly a decade after Ballard Power (NASDAQ:BLDP) became the darling of participants in the Fool's first ever Rule Breakers online seminar (the precursor to today's Motley Fool Rule Breakers investing newsletter), investment banker JPMorgan decided this morning that the fuel-cell industry is starting to show signs of promise. Initiating coverage on a quartet of fuel-cell pioneers, JP gave top honors to FuelCell Energy (NASDAQ:FCEL), which earned an "overweight" rating. Stationary-cell specialist Plug Power (NASDAQ:PLUG) lagged the pack with an "underweight." And JP declared neutrality on both Ballard and Medis Technologies (NASDAQ:MDTL). (Psst! JP? You missed one: Millennium Cell.)

Says the megabanker, anticipated contract wins in Connecticut and South Korea "will provide a positive catalyst for [FuelCell], and we believe they place FuelCell on a clearer path to profitability versus its fuel-cell peers."

Emphasis on "path"
Of course, as JP implied, not a one of these companies is currently earning a profit. To the contrary, over the past 12 months, they've managed to lose more than $200 million combined. But could JP be right that there's hope for fuel cells in general, and FuelCell in particular? For clues to the analyst's prescience, we turn once again to Motley Fool CAPS for a look at JP's record.

Unfortunately, what we find there is not entirely encouraging. True, JP scores in the top quintile of CAPS players, where its 87.79 CAPS rating earns it "All-Star" status. But from an absolute right/wrong perspective, the banker's hardly better than a flipped coin. Boasting an accuracy rating barely north of 50%, JP depends on outsized "right" guesses for its All-Star score -- guesses that happily include:

As any subscriber to Motley Fool Rule Breakers can tell you, a handful of doubles and triples can offset an awful lot of awfully bad guesses. However, I just plain don't agree with JP that this one is a winner. Sure, sales were up dramatically in the most recent quarter, and some 56% year over year, but the company is still losing more than 2 cents for every penny of revenue it brings in. Maybe it will win contracts in Connecticut and South Korea; maybe not. But until this company figures out how to earn a profit, more sales seem likely to mean little more than more losses.

Me, I've been bearish on FuelCell -- and publicly so -- for more than a year, and my "underperform" rating on the stock is currently outperforming the S&P 500 by more than 17 percentage points. JP's Johnny-come-lately endorsement of the industry doesn't change my opinion a whit.

Disagree? Feel free. Come on over to CAPS and tell me why.