Bove Likes BofA (BAC) (BK) (PNC) (COF) (STT) (STI) (NTRS) (SNV) (FBC) in Banking Sector

What's up with Rochdale Securities analyst Dick Bove?

Approximately a month after recommending investors sell the banking sector he had turned around and recommended a basket of banks to buy, including Bank of America (NYSE:BAC), Bank of New York Mellon (NYSE:BK), Flagstar Bancorp (NYSE:FBC), PNC Financial (NYSE:PNC), Capital One Financial (NYSE:COF), State Street(NYSE:STT), SunTrust(NYSE:STI), Northern Trust (NYSE:NTRS) and Synovus (NYSE:SNV).

Bove's thinking in his turnaround for some banks in the sector is a number of banks are selling below their franchise and liquidation values.

"At this moment liquidity and values are more compelling than the next disaster," Bove wrote in a note to clients. The banks listed above are those identified by Bove as such.

Bove's operating definition of cash liquidation value is cash holdings (cash plus net Federal Reserve funds and repurchase agreements) in excess of tangible common equity.

Still, Bove confirms the issues banks face are still in place, and in that regard nothing has changed. They've apparently fallen quicker than Bove had anticipated.

Either that, or someone got hold of Bove and told him not to be so negative on the sector.

Analyst Upgrades for (ABB) (EBAY) (ERIC) (FBC) (EXC)

ABB Ltd (NYSE: ABB), eBay, Inc. (NASDAQ: EBAY), Telefonaktiebolaget LM Ericsson (NASDAQ: ERIC), Flagstar Bancorp, Inc. (NYSE: FBC) and Exelon Co. (NYSE: EXC) received upgrades from analysts today.

Deutsche Bank (NYSE:DB) upgraded ABB Ltd (ABB) from a “hold” rating to a “buy” rating.

Stifel Nicolaus upgraded eBay, Inc. (EBAY) from a “hold” rating to a “buy” rating. They now have a price target of $42 on the company.

JPMorgan Chase & Co. (NYSE:JPM) upgraded Telefonaktiebolaget LM Ericsson (ERIC) from an “underweight” rating to a “neutral” rating.

FBR Capital upgraded Flagstar Bancorp, Inc. (FBC) from a “market perform” rating to an “outperform” rating. They have a price target of $2.00 on the company, up from $1.75.

Macquarie upgraded Exelon Co. (EXC) from an “underperform” rating to a “neutral” rating.

Flagstar Bancorp (NYSE:FBC) Still Has Long Way to Go

Considering the steps they had to take in the latest quarter, Flagstar Bancorp (NYSE:FBC) didn't perform too badly, according to FBR, but they still have a long way to go and a lot to prove before confidence in them can be fully restored.

FBR says, "Overall, we thought this was a good quarter for Flagstar, considering the drastic strategic actions the company had to take. The company was able to increase its mortgage originations, while NIM increased over 53 bps to 2.08% from 1.55% as deposit costs dropped more than expected. On the credit side, NPAs declined from $1,141M to $498M due to the sale of the nonperforming residential mortgages. We believe that after shedding problem assets and recapitalizing its balance sheet, Flagstar is better positioned to return to profitability in 2Q11 or 3Q11 and to eventually pay back TARP. However, the company still needs to execute its goals of increasing NIM closer to 2.30% and replacing its brokered deposits with more traditional and stable funding sources, while keeping operating costs at reasonable levels. If Flagstar can demonstrate that it is progressing toward these goals, we would become more constructive on shares."

FBR Capital reiterates a 'Market Perform' on Flagstar Bancorp (FBC), which closed Thursday at $1.65, gaining $0.02, or 1.23 percent. FBR has a price target of $1.75 on Flagstar.