Fifth Third Bancorp. shares gained ground in a sluggish market Wednesday on news of an analyst's report that the bank could generate an additional $200 million to shareholders over the next three years.

Shares in the Cincinnati banking company rose 37.5 cents to $54.75 after Smith Barney analyst Henry C. Dickson upgraded the stock to "buy" from "outperform" and raised his 18-month target price to $70.

"It's a very focused, well-run bank and getting only more so," Mr. Dickson said. The bank is posting 15% earnings growth and a 20% return on equity. "Those are numbers you don't see very often in any bank, or any company for that matter."

Mr. Dickson forecasts the Cincinnati-based bank's earnings per share will reach $3.25 this year and $3.80 the next

He said Fifth Third has an opportunity to improve its profit margins. "The most capital intensive business in the industry is the lending business and (Fifth Third) is one of the most successful banks at generating strong loan growth," Mr. Dickson said.

Because its lending was increasingly supported by higher cost funding, he said, Fifth Third's net interest margin had declined to the 4% range. "Now, we expect (Fifth Third) to be more selective about what is kept on the balance sheet."

Shares of KeyCorp, which hosted a meeting with analysts at its Cleveland headquarters, closed unchanged at $43.375, after hitting a 52-week high of $43.875 on Monday.

The drop was tied to investors' profit-taking following recent increases in many bank stocks, said Sandra Flannigan, analyst at Merrill Lynch & Co.

But she also said that investors continue to be disappointed in KeyCorp's performance compared to similarly-sized banks.

"I think the stock had run up in advance of the meeting," Ms. Flanningan said."Parts of the meeting were upbeat, but nothing caused analysts to really rush and raise estimates."

She said that although the bank's profits have met expectations, but the bank still needs to cut expenses. Bank officials indicated they would be focusing on those issues, Ms. Flannigan said, "but people still want to see results."

Analysts who attended the meeting said the bank intends to "reevaluate" its stock buyback program if shares reach $50.

Fresno, Calif.-based Vallicorp Holdings Inc.'s shares fell $2.25 to $16, after the company announced it was no longer involved in merger talks with an unidentified bank holding company. Merger rumors had boosted the stock's value to as high as $18.75 last week.

State Street Boston Corp. fell 37.5 cents to $55.50 despite an upgrade from Merrill Lynch analyst Livia Asher to "long-term buy" from "long-term accumulate." In the medium term, she still rates the stock as "neutral."

Ms. Asher said expected the company's earnings to rise now that it has curtailed its spending on technology.

She also said the company, which relies mainly on trust and money management for its business, is well-situated to handle the financial needs of the population as it ages in the coming years.

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