Procter & Gamble's Stock Jumps After Analyst Upgrades On 'compelling' Valuation

By Tomi KilgoreMarketWatch Pulse

Procter & Gamble Co.'s stock climbed 1.8% in premarket trade Tuesday, after an upgrade by SunTrust Robinson Humphrey analyst William Chappell, who cited valuation that was "too compelling to ignore." Chappell raised his rating to buy, after being at neutral for the last two years, and reiterated his stock price target of $80, which is 16% above Friday's closing price. The consumer products company's stock is down 25% year to date, compared with a 9.7% decline in the Dow Jones Industrial Average . Chappell said the stock's underperformance, and the fact that only a relatively small percentage of analysts have a buy rating on the stock, is deserved, given low-quality earnings and the developing market slowdown. "However, we believe that the sentiment is so bad any sign of improvement or even stabilization could lift the stock higher," Chappell wrote in a note to clients. He said the stock's dividend yield of 4% is the highest in 10 years, and 33% above the peer average. Chappell said a new CEO effective Nov. 1 and an increased focus on "clean" financials could serve as a upside catalyst for the stock.

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