Magazine article American Banker

BankAmerica Upgraded on Improved Performance

Magazine article American Banker

BankAmerica Upgraded on Improved Performance

Article excerpt

BankAmerica Corp. got a lift Monday from Smith Barney Inc., which upgraded its shares because of improved performance.

Bank analyst Henry C. "Chip" Dickson raised the rating of the San Francisco banking giant to "buy" from "outperform." He also raised his price target to $90, from $80.

BankAmerica shares rose $2.125, to $74.312, on a day when bank stocks seesawed in nervous trading amid investor anxiety about interest rates.

Mr. Dickson said that the $258.4 billion-asset company's earnings growth has improved as it has shed poor performing business lines and continued to manage its capital effectively.

He said he expects the company to tally an annual earnings growth of more than 14%.

"A year ago BankAmerica had 10 business units with returns below the cost of capital," Mr. Dickson said in a report. "Now there are three business units" in that kind of shape, he said. "The other seven were fixed or sold."

BankAmerica has established a record of improving the performance of its various business lines and expressed confidence that they will continue to do so, he said.

Mr. Dickson also says that company also has effectively managed its capital through a generous share repurchase program.

Meanwhile, he said he thinks the stock remains relatively affordable when the company's robust outlook is considered.

Indeed, BankAmerica has become something of a Wall Street favorite while its principal rival, Wells Fargo & Co., struggles to regain its balance after its acquisition of First Interstate Bancorp.

According to First Call Corp. …

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