UPDATE: Stifel Nicolaus Upgrades First Merchants to Buy (FRME)

Stifel Nicolaus is out with its report today on First Merchants FRME, upgrading shares of FRME from Hold to Buy. In a note to clients, Stifel Nicolaus writes, "FRME shares trade at 95% of tangible book value and 11.3x our 2012 EPS estimate versus the Midwest bank peer group median of 132% and 11.3x, respectively. Based on normalized earnings of $1.12, FRME shares trade at just 8.0x estimates versus the Midwest bank peer group average of 9.4X. Considering the apparent value of a bank franchise with a good core deposit base and earnings power, we are upgrading the shares to Buy. Our target price of $11 equates to 106% of our projected 2012 tangible book value of $10.38." Shares of FRME closed Thursday at $8.95.