Updated from 12:32 p.m. EDT

Bank of America ( BAC) stock will "ultimately... return to its all-time highs," Rochdale Research analyst Dick Bove writes in a note Monday, offering a contrast to a rival analyst's more bearish view on the banking sector.

Rochdale Research analyst Dick Bove initiates coverage of BofA with a buy rating, saying the company will benefit from a strengthening U.S. economy in the months and years ahead. Bove also sought to assuage skepticism about recent statements by the company's CEO Ken Lewis that BofA is on track to post $30 billion in post-tax earnings by 2011.

"I believe him," writes Bove, "and think that ultimately the price of this stock will return to its all-time highs."

Bove sets a $14 interim price target for BofA shares.

The stock, however, closed down 1.6% to $7.48 on Monday. Much of the financial sector was weighed by a note issued by CLSA Asia-Pacific Markets analyst Mike Mayo, who wrote that he expects loan losses at large-cap banks to increase to levels that "exceed the Great Depression."

Bove acknowledged investor concern about further losses on BofA's portfolio of troubled securities and loans, which was vastly expanded by its acquisitions of Merrill Lynch and Countrywide. However, he expects that securities losses may have already peaked, and said that Bank of America has enough capital and better equity than any other U.S. bank to cope with potential losses ahead.

The analyst also issues sharp criticism of revised accounting standards under which the global financial industry will soon operate, saying that "the result is to totally confuse everyone and to make sure cash flows through the bank are so obscured that no one really knows what is going on at the institution."

BofA has $1.82 trillion in assets, including $908.4 billion in loans and $499.4 billion in securities whose future valuation has caused concern. But Bove predicts that the recession has reached its trough and that Bank of America's huge scale and competitive position could drive better profitability and "above average" revenue growth in the years ahead.

"The company is so large that it will mirror events in the United States economy," Bove writes. "If the economy revives by yearend so will the bank. If the economy falters the bank will continue to struggle. My belief is that the economy has turned."