Is Procter & Gamble Ready to Rebound?

While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a look at particularly stock-shaking analyst upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of Procter & Gamble (NYSE: PG  ) gained 1.5% today after Wells Fargo upgraded the consumer-products gorilla from perform to outperform.

So what: Along with the upgrade, analyst Chris Ferrara boosted his price target on the stock to $86 (from $80), representing about 14% worth of upside to yesterday's close. The shares have slumped in recent months on sluggish sales, but Ferrara thinks that the pullback provides investors with a solid bargain opportunity given P&G's recent management changes and room for earnings improvement.

Now what: According to Wells, P&G's decision to reinstall A.G. Lafley as CEO bodes well for the company's turnaround initiatives.

"While PG's premium positioning in the U.S. and western Europe and low margin in certain developing markets present a margin mix obstacle, productivity momentum, improving market share, an increased emphasis on developing markets profitability and a more-focused strategy should drive improved execution," noted Wells Fargo. "A.G. Lafley's reputation should be immediately additive to the institutional 'buy-in' to the company's strategies."

When you combine that operational upside with the stock's 3%-plus dividend yield, I'd have to agree that P&G's current risk/reward trade-off looks tempting.

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