What happened

Shares of Scotts Miracle-Gro (SMG 0.76%) were moving higher today after the struggling lawn care products company got an analyst upgrade.

As of 12:39 p.m. ET, the stock was up 10.1% on the news.

So what

Barclays analyst Gaurav Jain upgraded his rating on Scotts from neutral to overweight, saying that he expects the company to delever rapidly even if macroeconomic conditions remain difficult. He predicted the company would deliver free cash flow per share of $6-$8, which gives the stock a price/FCF ratio of less than 10. Jain maintained his price target at $75 a share, implying upside potential of 50%.

Scotts Miracle-Gro has struggled this year as the company boomed and then busted with the pandemic cycle, and, like a lot of pandemic winners, it overinvested during the boom and is now forced to cut costs.

Its fourth-quarter earnings report out last week shows how the business is struggling. Revenue fell 33% to $493.6 million as strong demand for gardening products faded, and it reported a GAAP loss of $220.1 million, which includes impairment and restructuring charges. On an adjusted basis, the company lost roughly half that.

Free cash flow was also negative for the year at a loss of $242.5 million.

However, the company is committed to cutting costs. Through Project Springboard, it aims to cut $185 million in annual expenses, and said it would lower its debt-to-EBITDA ratio to 4 by the end of fiscal 2023, or next September.

The company is also targeting $1 billion in free cash flow over the next two years.

Now what

After the stock plunged over much of the last year and a half, falling more than 85% at one point, shares have actually rebounded and are up nearly 50% in the last month. That recovery, which included a volatile response to last week's earnings report, and today's upgrade offer some evidence that the worst could be over for Scotts.

After all, this is still a leading lawn care brand, and its sales slide should end soon as comparison will get easier. If Jain's forecast is correct, the agriculture stock should have upside from here.