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MeadWestvaco (MWV) Downgraded To 'Hold' By Deutsche Bank After Strong Performance

 March 25, 2013 02:10 PM

(By Balachander) MeadWestvaco Corp. (NYSE: MWV) shares were downgraded to "Hold" from "Buy" by Deutsche Bank (DB) after strong performance in recent weeks.

"While we continue to believe that a sum-of-the-parts valuation on MWV is comfortably in the upper $40's, we are not convinced that management and the Board will move to unlock all of that value in the near term," the bank wrote.

"Thus, with the shares near our PT, we find it difficult to argue that investors need to buy the stock now," DB said.

The bank has a price target of $37 on the stock.

"We would welcome moves to address the following issues..a concerted and decisive effort to reduce SG&A and improve margins in the company's core packaging operations," DB said. "A reconsideration of the firm's strategy and execution in pkg businesses. Since 2000, both acqns and execution around that strategy have fallen short on the financial scorecard."

[Related -Stock Upgrades And Downgrades: COG, EA, MGLN, MWV, RFMD, SWN, ZIOP]

A willingness to look outside MWV for the next generation of corporate leadership. A fresh and detached set of eyes could potentially offer the best route for delivering shareholder value, DB wrote.

"As we see it, MWV remains something of a "show-me" story. Upside risks are mostly the inverse of downside risks – stronger economy, higher demand and prices for MWV's products, and a stable cost environment," the bank said.

MeadWestvaco is a global packaging company and also produces specialty chemicals for the automotive, energy, and infrastructure industries.

[Related -MeadWestvaco (MWV) Swings To 4Q Profit, Yet Misses Estimates; Shares Off]

The stock, which has been trading in the 52-week range of $26.15 to $38.39, dropped 0.90 percent to trade at $36.33 on Monday.



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