How On Earth Do Stock Analysts Earn Their Keep?

I'll be upfront - I lost money on my investment in Lehman Brothers. In fact, I expect that I will lose every penny that I had invested in the venerable 158 year old investment banking firm that had survived two world wars, the Great Depression, and numerous stock market busts. What makes me angry is that I kept holding not because I was stubborn, as much as I kept listening to the advice of numerous and well-regarded stock analysts who kept a 'Buy' recommendation on the stock all the way down, until they finally cut their rating to a 'Hold' two days prior to Lehman declaring bankruptcy.

Obviously, these analysts have a relationship with the companies and can usually be granted an audience with their CEOs or CFOs. They are supposed to know the company inside and out, and yet the market knew before these analysts knew that the company was in serious trouble. As an investor who is more often conservative than speculative in nature, my portfolio is filled with well-known names of companies that have a long record of dividend payments. I am happy to ride out a drop in price while I receive a dividend (which I have been doing with companies such as General Electric or Microsoft). Fortunately, my portfolio is diversified enough that the loss has not been fatal. Even though my portfolio is showing a single digit percentage loss, I'm still well ahead of most indexes.
Where I have an issue is that the analysts were steadfast that the Net Asset Value of Lehman was three times the stock price, making it grossly undervalued. Not just one analyst but a slew of them took the same stance. Yet, the market seemed to know what these highly paid, overpaid and well-connected analysts didn't - that the assets of Lehman were worth much less than the stubborn (and arrogant) Lehman management had valued them at.

I take full responsibility for not selling, and I blame myself for my own inaction. However, as a well-informed investor, I do a lot of due diligence, research and reading before I make a decision. Now, I'm wondering if I'm wasting my time, because these analysts don't seem to know any more than the market does. So, how on earth do these stock analyst earn their keep?