Magazine article American Banker

Analysts Pick Wells Fargo, 1st Interstate

Magazine article American Banker

Analysts Pick Wells Fargo, 1st Interstate

Article excerpt

Wells Fargo & Co. and First Interstate Bancorp got endorsements from Wall Street on Wednesday after reporting strong second-quarter earnings.

Wells was added to PaineWebber Inc.'s "focus list" of buy-rated stocks, while First Interstate was raised to "accumulate" from "hold" by Natwest Securities Corp.

In both cases, analysts said lower loan-loss provisions and writeoffs were the crucial factors in the higher earnings.

Growth Still Meager

But revenue growth is weak for the banks, with no upturn in the California economy on the horizon, analysts said.

On a day when bank stocks were narrowly mixed, Wells Fargo rose 75 cents to $110 in late afternoon trading, while First Interstate gained 25 cents to $64.875.

The endorsements came although shares of Wells and First Interstate have risen strongly already this year. First Interstate shares are up about 39%, while Wells' stock is up about 30%.

In contrast, the American Banker index of bank stocks has risen about 7.5% this year.

But earnings were better than expected at both banks, leaving room for further stock-price increases, the analysts said.

Lawrence W. Cohn of PaineWebber cited "rapidly improving" asset quality at Wells in hiking his estimate of earnings this year to $9.05 per share from $7.70. In 1994, he expects $12 per share, up from $10.80 previously.

In the second quarter, Wells earned $2.46 per share, up from $1.33 last year and well over Mr. Cohn's estimate of $1.65. The primary reason for the spurt was a loan-loss provision of only $55 million versus $133 million last year.

On a Short List

The analyst said he thinks the bank's stock can reach $150 within 12 to 18 months.

The "focus list" is an investment tool for PaineWebber's retail brokerage customers. It contains up to 30 recommended stocks. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.