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Pro Analysis

Merrill: Viacom to rally 25 percent on valuations, potential merger with CBS

Pedestrians walk past the Viacom headquarters building in the Times Square area of New York.
John Taggart | Bloomberg | Getty Images
Pedestrians walk past the Viacom headquarters building in the Times Square area of New York.

Bank of America Merrill Lynch upgraded Viacom to buy from underperform on Thursday because of an attractive valuation and a potential merger with CBS.

"We view Viacom's risk/reward profile favorably due to a cascade of recent corporate events that create the potential for an accelerated turnaround," analyst Jessica Reif Cohen wrote in a note.

In her report, she predicted shares of Viacom could trade as high as $44 in the next 12 months, implying a gain of 25 percent from Wednesday's close.

Here are the chief catalysts that could propel the shares, according to Bank of America Merrill Lynch: