Midlantic Corp. shares, hit a 52-week high on Thursday after a vote of confidence from Lehman Brothers.
The Edison, N.J.-based company, which has been recovering from loan problems, was up 87.5 cents to $26.625 in late trading. Its shares are up 20.7% since yearend and 90.9% from a year ago.
Lehman banking analyst Katherine R. Hensel gave Midlantic an "outperform" rating, saying she believes the bank has good earnings prospects over the next three to four years.
"They have a strong management team that is finally getting the chance to focus on strategy as opposed to problem-solving," she said.
"We've seen this during the past few quarters," she said. "It will really be showing up in their numbers over the next few years.
Got Mabon's |Buy' rating
It was the second boost from Wall Street in the past two weeks for the company.
Two weeks ago, analysts at Mabon Securities Corp. awarded a "buy" rating to Midlantic, saving they believed its recovery was starting to blossom."
The "outperform" category is Lehman's second-highest rating and usually goes to stocks having a potential for upside gain in "total return" of at least 20% over the next year.
Ms. Hensel expects Midlantic's stock to reach the $29-$31 range next year. The analysts at Mabon said they felt it could hit $36.
60-Cent Dividend Anticipated
"Total return" refers to shareprice appreciation plus dividends. Midlantic's dividend is currently omitted, but Ms. Hensel believes it will be restored next year and estimates the 1994 payout will be 60 cents per share.
Midlantic was nearly swamped by losses from problem real estate loans in the recession that followed the economic boom of the 1980s in New Jersey.
It lost $5.22 per share in 1990 and a huge $14.38 per share in 1991.
Up, Up, and Away
New management was installed, beginning in April 1991 with the arrival of Garry J. Scheuring as chief executive officer. He had been vice chairman of Chicago's Continental Bank Corp.
Midlantic earned 8 cents per share in 1992 and $1.28 in the first half of this year, after giving effect to some accumulated tax benefits.
Ms. Hensel said she thinks Midlantic will earn $1.05 this year on a fully-taxed basis and accelerate to $2.30 per share next year on the strength of big declines in expenses for problem loans.
She estimates the company may earn $2.90 to $3 per share in 1995 and $3.30 in 1996 as its management is able to refocus the bank.
Focus on Relationships
Under Mr. Scheuring, the bank has turned much of its attention to retail customers and small business firms with "relationship"-type services.
That is a switch at Midlantic. once best known for its "hungry banker" television advertising campaigns seeking new loan customers.
Ms. Hensel does not believe Midlantic is a likely acquisition target soon, despite the considerable takeover activity that has occurred this year in New Jersey.
But she did say she felt Midlantic's management was "in tune" with shareholders and would consider any offer it might get.
