PaineWebber Inc. analyst Thomas McCandless upgraded Fifth Third Bancorp on Tuesday to "buy" from "attractive," saying the stock is a bargain at its current price.

Shares of the Cincinnati-based bank rose 75 cents, to $49.75, on the news. Volume was 294,900 shares, compared with a daily average of 129,000 shares. Fifth Third also received an upgrade from Fred Cummings of McDonald & Co.

"Given the company's unusual growth track record, it has long enjoyed a premium valuation to the regional bank group," Mr. McCandless said.

But not since the very bottom of the last banking industry downturn in late 1990 could an investor buy the shares at a premium as small as 10% to 15% to the regional bank group, he added.

The $15 billion-asset company, long regarded as one of the industry's finest performers, has been slow to attract value-hungry investors, who have spurned such growth stocks as Fifth Third this year, said Henry Dickson of Smith Barney.

The stock peaked at $52.25 in February, and has since slipped to $47.75 on the last trading day in April.

Fifth Third is clearly poised for growth and is an attractive investment, Mr. McCandless said.

The bank has less than a 5% market share in its three main markets - Ohio, Kentucky, and Indiana. And "many of the local super-regional banks appear to be in a state of turmoil and internal focus, including Banc One Corp., Huntington Bancshares, Keycorp, and PNC Bank Corp.," he added.

Fifth Third is well positioned to exploit this opportunity, the analyst said. It has an aggressive sales force and is one of the few companies to recognize the early importance of solid marketing muscle.

Mr. McCandless' 1995 earnings-per-share estimate for the bank is $4.35, and $5 next year, compared with a consensus among analysts tracked by First Call Corp. of $4.30 and $4.84.

Fifth Third's business ratios are stellar, he said. The company's efficiency ratio is 45.5%, compared with 63.9% for the industry. Its return on assets was 1.77%, versus the industry average of 1.16%.

But one analyst said the market has already recognized those fundamentals and that the current price is appropriate.

Gregory P. Anderson of Chicago Corp. argued that the price of 220% of book value and the 11.6 price-to-earnings ratio leave no room for price improvement.

Fee revenue was also weak in the past year, Mr. Anderson added. As a result, he rates the stock a "hold."

Mr. McCandless argued that the company's four main business lines all appear to be healthy and to contribute evenly to the bottom line, including the fee-based units.

Its Midwest Payment Systems, which processes ATM and credit/debit card transactions nationwide, enjoys 20% annual revenue growth, he said. Trust revenues, after a year of poor growth, appear to have bottomed, he added.

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