NEW YORK (AP) -- Procter & Gamble's surprise decision to bring back former CEO A.G. Lafley as its leader could be a positive for the world's largest consumer products maker as the company faces major challenges, analysts say.
Investors sent P&G shares up $3.01, or 3.8 percent, to $81.71 in premarket trading an hour before the market opening on Friday.
Late Thursday, the maker of consumer products found in 98 percent of American households such as Tide detergent and Crest toothpaste announced that CEO Bob McDonald was retiring and would be replaced by his predecessor Lafley, who served as CEO from 2000 to 2009.
Lafley's knowledge of the company and good reputation is a positive for P&G, analysts said. But longer term, they say, questions remain.
"The fact that Lafley is a known entity both to investors and P&G employees is likely to make the transition a smooth one early on," said Bernstein Research analyst Ali Dibadj. "However, any near-term jubilation may be tempered by downstream realities, including the potential of another reset year.
The biggest question looming is "How will A.G. change things?," said Citi Investment Research analyst Wendy Nicholson in a note to investors. She expects him to lower growth expectations for the fiscal year which begins July 1. She also expects him to invest in fewer big-picture priorities and stay focused on cost cutting.
She said that she hopes Lafley would hire back some executives who have left P&G in recent years.
"Senior management turnover has been at an exceptionally high level since McDonald took over," she noted.
Oppenheimer & Co. analyst Joseph Altobello said McDonald's retirement was not a surprise given increasing investor pressure to improve results, but said Lafley's return was a surprise, although he noted that it is unclear how long his stint at CEO might last.
He kept his "Perform" rating on the stock and said he expects the company's portfolio of "largely premium-priced brands" to continue to struggle to regain market share from lower priced competitors.