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First Merchants rises following analyst's upgrade

NEW YORK (AP) -- Shares of First Merchants Corp. rose Thursday after an analyst upgraded the financial holding company, saying it will report stronger earnings growth than its competitors.

THE SPARK: Keefe Bruyette & Woods analyst John Barber upgraded the shares to "Outperform" from "Market Perform." Barber expects First Merchants stock to recover from a recent slump, and he said its earnings per share should grow more than 10 percent per year for the next two years, a rate that should top its peers.

THE BIG PICTURE: Barber estimates that the company will earn $1.14 per share in 2012, rising to $1.30 per share in 2013 and $1.50 per share in 2014.

According to FactSet, analysts expect income of $1.40, $1.22, and $1.32 per share for those years, on average. Barber's 2012 estimate is significantly below Wall Street views because he excludes a one-time gain of 21 cents per share.

SHARE ACTION: First Merchants rose 42 cents, or 3.1 percent, to $14 in afternoon trading. The shares are down about 14 percent from this year's high of $15.78 on Sept. 21. That is the highest price for First Merchants shares since February 2009. Even with the recent decline, the stock is up about 60 percent in 2012.