UPDATE: Bank of America Merrill Lynch Upgrades MeadWestvaco

In a report published Thursday, Bank of America Merrill Lynch analyst Alexander Wang upgraded

to Buy, with a $38.00 price objective. According to the report, MWV's new cost reduction program should result in increased earnings and cash flow from its packaging businesses and suggests an increased motivation to improve performance. “This morning, MWV announced a new program to generate increased earnings and cash flow from its packaging businesses,” the report noted. “In the past, we have been concerned that MWV was not generating sufficient return from these units. Moreover, at times, MWV has been viewed by investors to have too high a level of expense relative to its revenues and fundamental performance. This newest cost reduction program, following the one that was announced last year, suggests that the level of urgency at MWV has intensified in the last year-plus. Moreover, the cost savings from the program are sizeable and currently not in our forecasts. Considering these points and the new upward tension to our forecasts, we upgrade MWV to Buy. We will return with additional points and a review of our model shortly.” Some risks to its price target include the broader employment and housing picture, demand trends for bleached board, CNK board, dispensing and other packaging, demand trends in beverage and other MWV packaging end markets. MWV closed Wednesday at $37.38 with shares trading up at 4.82 percent.