Ahead of the Bell: Nalco upgraded by Goldman Sachs

A Goldman Sachs analyst upgraded waste and water treatment company Nalco Holding Co. Monday, saying its value proposition appears more positive.

In a note to clients, Robert Koort wrote that Nalco has improved operations in Europe, taken more aggressive pricing action and achieved stable growth in its energy and other divisions. He raised his rating to "Neutral" from "Sell."

Nalco also has identified several causes for its previous pricing shortfalls and has "articulated a more robust pricing strategy that should more efficiently offset cost inflation with plans to retain hard-fought increases," he said.

Koort said that following Nalco's investor day on Thursday, he was "more impressed by management's candid assessment" of its execution issues over the past few years and encouraged by the potential for improvements in operations.

Separately, analyst Mark Gulley of Soleil Securities Group said the Naperville, Ill.-based Nalco is repositioning itself more as an energy and environmental company and less as an industrial production business.

"Over time, this should also have positive implications for its valuation multiple," he wrote in an investor note.

Elsewhere, Laurence Alexander of Jefferies & Co. said in an investor note that management has offered "candid explanations of the mechanics of prior missteps (and how they can be fixed)," and said pricing initiatives "appear to be gaining traction."

He reiterated his "Buy" rating.