Banking analyst Richard Bove recently stated that shares of Bank of New York Mellon (NYSE: BK), with its strong prospects for significant growth, are way undervalued, and should be priced at double its current valuation. Bove recommends a strong buy on the stock.

Bove has a target price of $42 for Bank of New York Mellon stock, which stood at $27.74 as of this writing.

In a phone conversation with Reuters, Bove stated that “There is something wrong with the whole concept of how people are investing in bank stocks for this stock to stay where it is, and those other (bank) stocks to soar.

“I think at some point investors are going to begin to recognize that all these bank stocks that moved up lately don’t have any earnings. This stock is not moving up and it has significant amount of earnings.”

It seems that third-quarter net losses soured investors on the stock. although after the exclusion of one-time items earnings actually exceeded expectations. Bove believes this is a great opportunity to generate some impressive capital gains on a strong but out-of-favor banking stock.

Another strength that makes Bank of New York attractive as an investment is its low exposure to loans, which positions it better than many of its major competitors who will suffer from the upcoming re-sets of Alt-A and commercial loans over the next 18 months.

Along with its strong defensive posture, the bank also has some strong growth news as well, with increased liquidity, that the bank is using to target new securities which is growing the markets it targets. Secular growth for the company could be from 10-12 percent according to Bove, with the normal bank looking at a far less potential of about 4 percent secular growth.

Bank of New York Mellon has been buying back stock sing June, acquiring $3 billion in preferred shares back from the U.S. government, while in August paying out $136 million in Treasury warrants which it used to also buy back its stock.