(FORTUNE Magazine) – A tired product mix hamstrung by slow sales growth. A CEO who quits without warning. Repeated earnings disappointments. And a sprawling corporate empire with executives in four countries who speak different languages and can't seem to work together. It's easy to see why Pharmacia & Upjohn is the company that Wall Street loves to hate.

Since last fall, the drug giant's stock has fallen by 25%, even as the Standard & Poor's pharmaceutical index has jumped 34%. The most recent hammering was especially brutal: When the company announced yet another earnings shortfall on April 23, the stock plunged 14% in a day. Research reports, normally dry and quantitative, boiled with a fury rarely seen on Wall Street. Sanford Bernstein's Carl Seiden called management's turnaround plan "a vague and hollow collection of business buzzwords...No timing, no targets, no convincing sense of urgency." And Seiden likes the stock. Another analyst, Paine Webber's Jeff Chaffkin, even panned Pharmacia & Upjohn at one point as "unattractive"--a rating so negative that few analysts ever unleash it for fear of losing their corporate contacts.

Sounds like a natural short, right? Not necessarily. Wall Street tends to overreact to bad news, and this may be one of those times. Says analyst Seiden: "There are definite risks in the near term, but there's a growth story here in the long term." With expectations so low, any sign of improvement could produce a jump in the shares. "If they became just an average drug company," says Seiden, "Pharmacia & Upjohn would be a great stock."

And there are some positive signs. First, there was the appointment last week of Fred Hassan as CEO. Previously at American Home Products, Hassan had received high marks for smoothly integrating the diverse businesses brought together in AHP's multibillion-dollar acquisition of American Cyanamid--a talent Pharmacia & Upjohn sorely needs. PNU was formed in 1995 by the merger of the U.S.'s Upjohn and Sweden's Pharmacia. Top execs were scattered among offices in Kalamazoo, Michigan, Stockholm, and Milan; yet rather than picking one of those locales as headquarters, the company decided to create an entirely new base of operations in London. Not only did this add another level of bureaucracy; it further complicated turf battles among British, Italian, Swedish, and American executives. Hassan seems an ideal choice to resolve the logjam: Born in Pakistan and now an American citizen, he has already worked both sides of the Atlantic, having spent 17 years with Switzerland's Sandoz before joining AHP.

Pharmacia & Upjohn also has an enviable stable of mature, profitable products, such as Rogaine, Nicorette gum, and Motrin, as well as a pipeline of exciting new drugs that have been overlooked in all the recent furor. One example: Detrusitol, a treatment for urinary incontinence that carries fewer side effects than existing drugs and is on track for FDA approval by early 1998. "If this were in the pipeline of Merck or Pfizer, investors would have 50-page reports on it," Seiden says. "It could easily be a billion-dollar drug."

Pharmacia & Upjohn's shares sell at around $33--some 15 times next year's projected earnings. Merck, in contrast, is selling at 21 times earnings. And thanks to PNU's recent dip, the stock yields 3.3%.

All this has made a believer of Hemant Shah--an independent drug analyst who has repeatedly made the Wall Street Journal all-stars list. Other analysts, he says, "are looking at the next several quarters. One has to be more patient." Shah, who is leery of pricier names like Merck and Bristol-Myers Squibb, says PNU could hit $50 within 12 months. The shares carry more risk than other drug stocks. But, says Shah, "if Hassan can bring these two cultures together, the company should make a big comeback."