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 track the long-term performance of Wall Street's best and brightest -- and its worst and sorriest, too.

And speaking of the best ...
As the trading week draws to a close, it appears First Solar (NASDAQ:FSLR) shareholders will end it on a down note. Why? Because Canadian investment banker Canaccord Adams returned from First Solar's analyst day Wednesday unimpressed, and already, its disillusionment is costing First Solar investors money.

While allowing that First Solar announced "ambitious targets" for "module efficiency and throughput," Canaccord criticized First Solar for providing "little else in the way of some of the positive announcements we were looking for." Moreover, Canaccord expressed doubt as to First Solar's ability to hit its targets, and worried aloud over the company's move to seek "higher absolute income" by way of "lower gross margins." Result: Until Canaccord sees a catalyst that could move the shares higher, it's pulling its buy rating on the stock.

But should you?

Let's go to the tape
The answer to that question is a bit more complicated than it might seem. You see, Canaccord Adams has an impressive track record -- outperforming 90% of the investors we track on CAPS.

However, its record to date on semiconductors in general, and the solar sector of this industry in particular, is, shall we say, mixed. Canaccord shines on semiconductors, racking up 65% accuracy in the sector ...

 

Canaccord Says:

CAPS Says :

Canaccord's Picks Beating (Lagging) S&P By:

Xilinx  (NASDAQ:XLNX)

Outperform

***

44 points

Texas Instruments  (NYSE:TXN)

Outperform

****

38 points

EMCORE  (NASDAQ:EMKR)

Outperform

*

(49 points)

... but the closer you get to the "sun stocks," the less Canaccord dazzles:

 

Canaccord Says:

CAPS Says:

Canaccord's Picks Beating (Lagging) S&P By:

Evergreen Solar (NASDAQ:ESLR)

Underperform

***

14 points

JA Solar (NASDAQ:JASO)

Outperform

****

(38 points)

Canadian Solar (NASDAQ:CSIQ)

Outperform

***

(40 points)

And even Canaccord's well-timed exit from First Solar (the analyst racked up a whopping two percentage points of market outperformance over 15 months of recommending the stock) gives it no further than a 50-50 record in solar. Underwhelming at best.

When you're right, you're right
Canaccord's mediocre record in the sector notwithstanding, I find it hard to fault the decision to abandon First Solar here. While I'll grant you that First Solar's 29 P/E looks attractive in light of consensus expectations of an annual growth rate of 39% over five years, the situation really isn't as simple as that.

For one thing, First Solar's reported earnings (the E in the P/E) overstate the company's true cash profitability. Fact is, while First Solar reported more than $466 million in GAAP earnings, from a free-cash-flow perspective, First Solar is actually in the red, burning more than $7 million over the past 12 months.

In addition, the "39% growth" that analysts continue projecting for First Solar seems unlikely to materialize in an environment of free-falling polysilicon. The lower the poly price tumbles, the less First Solar's cost advantage over traditional solar panel makers.

According to a report just out of Hapoalim Securities (which also attended the analyst day conference that spooked Canaccord), solar module prices "continue to fall much more quickly than expected." Hapoalim describes the situation as an "acute oversupply" in polysilicon today.

This is putting "downward pressure on margins" -- which means that First Solar's "ambitious" gross margin targets are less a desired goal, and more a necessity that economic circumstances have forced upon management.

Foolish takeaway
First Solar's now-questionable P/E ratio is bad enough. Add to it serious, well-founded doubts as to the company's ability to grow as projected, and this stock is just too risky to own at today's high price.

Personally, I would heed Canaccord's warning on First Solar -- and turn off your lights on the way out.

Fool contributor Rich Smith does not own shares of, nor is he short, any company named above. You can find him on CAPS, publicly pontificating under the handle TMFDitty, where he was recently ranked No. 831 out of more than 135,000 members. The Motley Fool has a disclosure policy.