UDPATE: Bank of America Upgrades Eastman Chemical to Buy

Bank of America has published a research report on Eastman Chemical Company

and has upgraded the company from Neutral to Buy on a proposed SOA deal. In the report, Bank of America writes, "Our more constructive posture reflects not only our positive view of Eastman's pending acquisition of Solutia for $4.7bn, or 8.9x trailing EBITDA pre-synergies, but also improved prospects in existing lines, including margin restoration in Eastman's PCI segment and demand recovery elsewhere aided by re-stocking. We consider CEO Jim Rogers to be a savvy steward of shareholder capital and see much to like here including (1) estimated EPS accretion of $0.75 in the first year after expected closure in mid-2012; (2) tax efficiencies based on Solutia's $1.5bn of NOLs; (3) pro forma EBITDA margin accretion of 160bps; (4) potential for slight enhancement to growth rate; and (5) increased exposure to developing markets." Bank of America has also raised the price objective from $52 to $64 on Eastman Chemical, which is currently trading up $3.28 from yesterday's $47.12 closing price.