UPDATE: Morgan Stanley Upgrades Newell Rubbermaid, Expects 'Multiple Expansion' To Occur

In a note released Wednesday, Morgan Stanley analyst Dara Mohsenian upgraded Newell Rubbermaid NWL from Undefined to Overweight and set a $34 price target. In describing the reason for the upgrade, Mohsenian pointed to three key factors:

• Topline Growth: Mohsenian believes Rubbermaid will prove it can sustain revenue growth of ~4 percent. He believes this will happen through increased advertising, expansion into emerging markets and a macro recovery coming out of a "soft" first quarter.
• "Strong" Free Cash Flow: Mohsenian anticipates the company will use its "strong uncommitted" free cash flows to return value to its shareholders through acquisitions and buybacks.
• Compelling Valuation: Mohsenian says that despite a new CEO and management team, "higher-quality" EPS, and reinvestment in the company, Rubbermaid is trading below its historical multiples.

To conclude, Mohsenian wrote, "We expect multiple expansion to occur with improving balance of the year results."