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 ...
Monday dawned sunny for American Express (NYSE:AXP) investors, as their stock received an upgrade from one of the best stockpickers in the business. Starting off the week on a bullish note, Stifel Nicolaus argued that with minimal exposure to subprime loans and a "spend-centric" business model, AmEx is likely to feel the least hurt from Congress' new Credit CARD legislation. The analyst proceeded to lift its "sell" rating on the stock, and says AmEx is now a "hold."

Whereupon, the stock jumped 5% in response -- but should it have?

Let's go to the tape
At first glance, the answer looks to be an unqualified "yes." After all, Stifel is one of "Wall Street Best" bankers (as scored by CAPS). And while Stifel is perhaps best known for its outstanding record in biotech, where it's picked such winners as ...

Stock

Stifel Says:

CAPS says:

Stifel's Picks Beating S&P By:

Gilead Sciences (NASDAQ:GILD)

Outperform

****

69 points

Vertex Pharma (NASDAQ:VRTX)

Outperform

***

69 points

... Stifel's record in the plastic-sphere also looks pretty nice. The company's beating the market by a good 15 points on its recommendation of AmEx rival MasterCard (NYSE: MA), with another 28-point winner in Visa (NYSE:V).

That said, I do see reason for caution on today's upgrade. Consider, first of all, Stifel's less-than-enviable record in the general sphere of finance . Among Commercial Banks, Stifel's recommendations currently outperform the market only 44% of the time, with recommendations often moving opposite to how the analyst predicts:

Stock

Stifel Says:

CAPS says:

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

WestAmerica Bancorp

Underperform

*

9 points

First Horizon

Outperform

*

26 points

Marshall & Ilsley (NYSE:MI)

Outperform

**

(52 points)

BB&T (NYSE:BBT)

Underperform

***

(17 points)

Consider too that AmEx's current valuation of 12 times trailing earnings looks a mite optimistic in light of consensus projections for 10% five-year earnings growth. What worries me most about this valuation is that if you ask Stifel, these projections themselves are in doubt. Whereas most of Wall Street thinks AmEx will earn $0.97 per share this year and $1.44 in 2010, Stifel itself is projecting that AmEx will earn just $0.65 this year, and $0.75 next.

I suspect that's why Stifel's upgrade this morning stopped short of telling people to actually buy AmEx shares -- and just hold 'em if you've got 'em. (Don't get me wrong, Stifel does think that AmEx's rate of losing money will "stabilize" this year, but for now, these losses are still rising.)

Foolish takeaway
To me, continuing losses plus a suggestion that Wall Street's estimates are overenthusiastic do not make a bull case. Combine them with questionable valuation on the shares even if Wall Street is proven right... and my advice comes down to just one thing:

AmEx? Leave home without it. At least until the bleeding stops.

Vertex Pharmaceuticals is a Motley Fool Rule Breakers selection. American Express is an Inside Value recommendation, and the Fool owns shares of it. The Motley Fool has a disclosure policy.

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's currently ranked No. 695 out of more than 135,000 members.