KeyBanc Starts MeadWestvaco (MWV) at Buy

KeyBanc initiated coverage on MeadWestvaco (NYSE: MWV) with a Buy rating and a price target of $46.00.

Analyst Adam J. Josephson said, "The stock underperformed its peers and the market last year owing to disappointing operational performance, but has outperformed so far this year presumably owing to expectations of better days ahead. We share that view, owing to the high-quality assets that we think the Company possesses, the significant capital investments the Company has made over the past three years, recent management changes, two large cost savings programs that have yet to fully bear fruit, but which we expect to, and certain defensive characteristics that we think the Company has (a sizable dividend, an under-levered balance sheet compared to its peers, and a substantially overfunded U.S. pension plan)."

"While the stock has performed well this year (up 15% compared to the S&P 500 up 5%, through May 30th), we nonetheless believe the stock will continue to outperform its paper/packaging peers over the next year as the Company’s performance meaningfully improves and as investors gravitate to more defensive stocks. Our $46 price target implies 13% upside, which, together with the stock’s 2.5% dividend yield, implies a total return of 15%," he added.

For an analyst ratings summary and ratings history on MeadWestvaco click here. For more ratings news on MeadWestvaco click here.

Shares of MeadWestvaco closed at $40.58 yesterday.

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