UPDATE: Bank of America Upgrades First Niagara Financial Group to Buy on Valuation

Bank of America increases its rating on First Niagara Financial Group

from Neutral to Buy but lowers its price target from $10 to $9. Bank of America says, "Valuation is unlikely ever a good catalyst, but FNFG's valuation gap is hard to ignore. FNFG trades at a 3x discount on a '13E P/E basis relative to smid-caps (9.4x vx 11.9x), and in line on TBV despite better returns. Bears will argue an eroded denominator boosts FNFG's ROTE. But, returns are still 300bp superior in '14, even after assuming FNFG rebuilds tier 1 common 222bp to 10.84%. Post preannouncement, we expect consensus to come down to our new '13 estimate of $0.85 (was $0.98). We think shares are fairly valued at 11x P/E and 1.4x TBV." FNFG closed at $7.94 on Wednesday.