Magazine article American Banker

Mellon Gets Yet Another Top Stock Analyst Rating

Magazine article American Banker

Mellon Gets Yet Another Top Stock Analyst Rating

Article excerpt

Mellon Financial Corp. has added another top stock analyst rating to its trophy case.

First Security Van Kasper on Wednesday upgraded Mellon shares to "strong buy" from "buy" and raised its 12-month price target $14, to $60.

The Pittsburgh banking company was already a favorite stock of analysts, with an average rating of 1.6 on a First Call/Thomson's scale from 1 (strong buy) to 5 (sell).

Diana Yates of A.G. Edwards & Sons Inc. increased her target price $4 Thursday, to $52, because of an expected price-earnings multiple of 23 times 2001 earnings of $2.24 per share. Mark T. Fitzgibbon of Sandler O'Neill & Partners lifted his target price $5 Tuesday, to $51.

Mellon shares rose 18.75 cents, or 0.43% to close at $43.8125 Thursday, a weak trading day for banks.

"Management continues to leverage its nonbank operations," said First Security analyst Eric E. Rothmann. Citing the company's ability to create above-average earnings growth, he said his 2001 estimate of $2.29 a share would provide a 40% return to investors, excluding the current 2.1% dividend yield.

Mellon's ongoing shift from traditional banking into financial services is a process of "creative destruction to make more money," Mr. Rothmann said. "Mellon's continued leveraging of its asset management capabilities will be critical to its future success."

In a report, Ms. Yates said Mellon is "well positioned to benefit from the changing demographic trends" by serving baby boomers who are making a switch from consumption to investment. …

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