Price Surge on J.P. Morgan's Strong Results Prompts Analyst to Abandon 'Buy' Rating

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J.P. Morgan & Co. shares were downgraded Tuesday by Lawrence Cohn of PaineWebber Inc., who said the stock was getting too expensive.

Mr. Cohn cut his rating to "neutral" from "buy" after a better-than- expected earnings report Monday sent Morgan's stock soaring past Mr. Cohn's target of $102.50 a share.

The shares rose $2 Tuesday, to $104.50, amid a strong bank rally that lifted the S&P bank index 2.68%.

The analyst maintained his earnings-per-share estimates of $7.70 for 1997 and $8.10 for 1998.

Other market observers also had misgivings as they read between the lines of the glowing earnings report.

Though Morgan made gains from trading and investment banking, those lines of business also boosted expenses more than some analysts had hoped.

"I think generally their expenses are a little high, and would like them to come down," said Hunter Hallowell, a Dresdner Kleinwort Benson analyst who is leaving to form Endurance Capital LLC, an institutional research and money management adviser.

He said Morgan has had to step up spending to offset a talent drain caused by the entry of large foreign investors in the market.

Mr. Hallowell shared Mr. …