Magazine article American Banker

Fleet's Divestiture Plans Earn It Upgrade to 'Buy' from Alex. Brown Analyst

Magazine article American Banker

Fleet's Divestiture Plans Earn It Upgrade to 'Buy' from Alex. Brown Analyst

Article excerpt

Citing favorable news about its divestiture plans, Alex. Brown & Sons Inc. analyst George Bicher Thursday upgraded his investment rating on Fleet

Financial Group to "buy" from "hold."

On Wednesday, Fleet Financial, along with state and federal regulators,

unveiled plans to divest $3.2 billion of New England deposits as part of the bank's pending purchase of Shawmut National Corp.

As a result, Mr. Bicher said, the threat of excessive divestitures is now lifted, and Fleet's original cost-savings expectations are still valid.

Fleet shares finished up tktk at tktk.

In the months following the February merger announcement, some observers

had predicted Fleet might have to divest between $5 billion and $6 billion

of deposits.

"The company has not lost the deal economics (that) a larger divestiture

would have forced," Mr. Bicher said. "With concerns over the divestiture size now alleviated, we believe the market will soon begin focusing on the

earnings momentum that will be created by the cost cutting in 1996."

Mr. Bicher predicted earnings per share would reach $4.55 in 1996, 2% higher than the First Call Corp. consensus estimates of Wall Street analysts, which is $4.47 per share.

On the flip side, Henry "Chip" Dickson, a bank analyst at Smith Barney Inc., said now is not the time to pat Fleet on the back with a "buy" rating. Fleet still has an extensive process of merger integration ahead, he said.

"Because of the high level of expense cuts, there could be a significant

level of discontinuity" that could affect performance, he said. This issue

not only afflicts Fleet, he said, but beguiles all the large acquirers, none of which have a "buy" rating from Mr. Dickson.

But Gerard Cassidy of Hancock Institutional Equities Services noted that

Fleet has a solid record of successfully integrating its acquisitions. …

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