UPDATE: Bank of America Upgrades City National

In a report published Thursday, Bank of America Merrill Lynch analyst Erika Najarian upgraded

to Neutral from Underperform, raising its price objective to $80.00 from $52.00. “We previously had a more cautious outlook on the stock, given what we saw as premium valuation for potential EPS upside when short rates went up and believe it was an expensive “call option” to pay,” the report said. “That said, especially with the yield curve steepening, we think short-rate sensitive names like CYN should continue to trade at a premium multiple on earnings. Considering that, paired with continued, consistent strong loan growth, we no longer believe there is significant risk to market multiples.” According to the report, shares are trading at 19.4x ‘14E EPS and 2.2x ‘14E TBV - in-line with high growth peers. We are raising our 4Q13 EPS estimates by a penny to $1.05 (from $1.04) and our '14 EPS estimate to $4.05 (from $4.00) and our '15 estimate to $4.30 (from $4.25), primarily on modestly better net interest income due to stronger loan growth. “CYN continues to be a best-in-class franchise, and offers long-term investors material EPS leverage from a continuing US economic recovery and an eventual rise in short interest rates,” the report said. CYN closed Wednesday at $77.82.