This Just In: Upgrades & 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 tell you what the analysts said and stop there. No, we're here to hold Wall Street to account. We're going to tell you what the analysts said ... and then show you whether they know what they're talking about. Helping us in this endeavor will be Motley Fool CAPS, our tool not only for rating stocks, but also for rating the analysts who rate stocks. 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 ...
Wednesday evening, trade-school operator Universal Technical Institute (NYSE:UTI) reported another disappointing quarter. Earnings were driven lower by higher operating costs from the company's expansion of capacity, in combination with fewer students showing up to fill that capacity. No sooner had the news broken than Banc of America Securities threw in the towel. Bullish on UTI since initiating coverage with a "buy" rating in February 2004, the firm reluctantly downgraded it to neutral on Thursday.

Down low, too slow
Unfortunately for BoA, this was a downgrade that came three years too late. Over the three years that BoA has been encouraging investors to buy into UTI, the stock has dropped a whopping 28%. Adding insult to penury, UTI investors have watched the rest of the investing world head the other way, as the S&P 500 climbed 33% in value.

Pity, because the UTI debacle aside, BoA has proved itself a pretty sharp stock picker overall. At CAPS, it currently sports a 96.39 rating, good enough to put it in the top 5% of our coterie of lay and professional analysts. Let's take a look at a few of the calls it's made right.

Of course, BoA's been wrong before, too:

Perhaps the moral of this story is that even good investors make mistakes. But if BoA doesn't really "get" UTI, never fear -- there are others who do.

Motley Fool Hidden Gems , for instance. Here, Fool co-founder and certified Gems-ologist Tom Gardner has twice picked UTI. Arguably mistiming his initial call -- which, although it's up 3%, is lagging the S&P -- Tom stuck to his guns and re-upped his buy recommendation in December 2006. That pick is currently tanning the S&P's hide, beating the broader market's performance 23% to 3%.

Want to see what other investors are saying about UTI, or any other stock for that matter. Just follow this link to your free registration on Motley Fool CAPS.

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 44 out of nearly 22,000 raters. The Fool has a disclosure policy.