Magazine article American Banker

NationsBank Begins to Impress Analysts as Share Price Lags

Magazine article American Banker

NationsBank Begins to Impress Analysts as Share Price Lags

Article excerpt

NationsBank Corp. stock has been a notable laggard this year, prompting several analysts on Wall Street to declare a buying opportunity.

UBS Securities Inc. lifted its recommendation on the stock Wednesday to "buy" from "hold." UBS expects the bank to report strong loan growth, stable margins, and good revenue growth.

"They are at the low end of the range for both money-center and regional banks," said Francis X. Suozzo of S.G. Warburg & Co., who last week raised his rating on the stock to "buy" from "hold."

Like a Money-Center

Investors have treated the North Carolina superregional bank more like a money-center than a regional. And money-center stocks have been hit hard by worries about trading operations and higher interest rates.

Mr. Suozzo is betting that will change. "We think NationsBank's [stock price] discount to the average regional bank will narrow from 16% recently to about 5%" this year.

His price target for the stock is $58 by yearend, or nine times his 1995 earnings estimate of $6.40. NationsBank was unchanged Wednesday at $46.25 a share, trading around eight times Mr. Suozzo's 1994 estimate of $5.75 per share.

Positive Signs

The analyst cited several reasons for his op

* Likely passage of interstate banking legislation, possibly including interstate branching powers. With 2,000 offices in nine states, NationsBank would be among the chief beneficiaries.

* Consolidation of recent acquisitions and implementation of the bank's new "financial services model," which should sustain 11% to 13% growth in earnings per share annually for three to five years. …

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