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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

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: