Why Parker-Hannifin Corporation Is 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 closer look at particularly stock-shaking upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of Parker-Hannifin Corporation (NYSE: PH  ) climbed 1.5% today after MKM Partners upgraded the motion and control technologies company from neutral to buy.

So what: Along with the upgrade, analyst Joshua Pokrzywinski planted a price target of $130 on the stock, representing about 17% worth of upside to yesterday's close. While momentum traders might be turned off by the stock's sharp pullback in recent weeks, Pokrzywinski thinks that Parker is now too cheap to pass up given its earnings power and multiple expansion potential in 2014.

Now what: According to MKM, Parker's risk and reward trade-off is particularly attractive at this point. "Feedback from peers and the company itself suggests end markets are in recovery and set up a beat and raise story through year end," noted Pokrzywinski. "Moreover, the strategic view on Parker has vastly improved, in our opinion, as what has historically been an uneventful quarter-to-quarter execution story is augmented by a European restructuring program and what we believe will be much greater emphasis on capital deployment." When you couple that room for operational improvement with the stock's forward P/E of 13, MKM's turnaround call is easy to understand. 

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