Why The Bancorp Stock Surged Today

One of the more popular, albeit under-the-radar, finance sector stocks became even more valuable on Thursday. The Bancorp's (NASDAQ: TBBK) share price rose by nearly 8% that trading session, thanks largely to a recommendation upgrade from an analyst.

It's been quite the pivot

The Bancorp, an innovative fintech that provides back-end banking services for companies that wish to offer them but lack their own bank charters, was upgraded by Keefe, Bruyette & Woods. That firm's analyst, Timothy Switzer, now rates the company an outperform (buy, in other words), up from his previous tag of market perform (hold).

According to reports, Switzer wrote that The Bancorp stands to gain from its relatively recent morphing into a third-party banking services fintech from its former concentration on being a "sponsor bank" for payment cards. As this includes a suite of new programs, the company has a good chance of at least meeting the aggressive guidance laid out by management.

In future periods, the company's atypical business model should lead to higher growth over its more traditional peer banks, the analyst predicted.

A third-party standout

The Bancorp is indeed an exciting and innovative operator in the typically staid and tradition-bound banking world. It continues to grow its business and to post impressively high-margin profits, and I think its high potential justifies the fairly rich valuations of the stock at present.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.