Magazine article American Banker

PNC Wins Upgrade from Dean Witter

Magazine article American Banker

PNC Wins Upgrade from Dean Witter

Article excerpt

PNC Bank Corp. received a boost on Monday from Dean Witter, Discover & Co., which raised its rating of the Pittsburgh company to "accumulate" from "neutral."

"The stock is attractively valued again," said Dean Witter analyst Anthony R. Davis. And meanwhile, he noted, "PNC's fundamentals continue to strengthen."

The stock was unchanged at $29.625 in late trading on Monday.

Since June 30. Mr. Davis noted. PNC shares have been "noticeably weaker" than those of other regional banks - failing 12% while others have edged down an average of 2.5%.

$36 Target Set

The analyst has a $36 price target for the stock during the next 12 months, believing it will sell at 70% of the Standard & Poor's 500 index on a price-to-earnings basis. It currently trades at only 55% of this "market multiple'"

That, coupled with the stock's current yield of 4% - highest among the regional banks he follows - puts PNC's potential total return at 28%, Mr. Davis said.

The analyst noted several other favorable factors about PNC.

During the second quarter, the bank's return on equity was 17.5% and its efficiency ratio a trim 52%.

The efficiency ratio is a bank's gross operating expense divided by revenues on a fully taxable basis.

PNC had the second best ratio among the nation's 50 largest banks - behind only Republic New York Corp., according to Keefe, Bruyette & Woods Inc.

Mr. Davis also likes PNC's acquisition strategy, saying the bank has been "disciplined" and limited itself to deals that have added significantly to earnings. …

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