BankAmerica Corp. was upgraded Thursday by James Hanbury of Wertheim Schroder & Co., who cited improvements in the bank's asset quality and efficiency as the California economy edges toward a recovery.
BankAmerica's price has risen on the strength of similar comments by stock analysts from below $40 at the beginning of April to just under $50 this week.
Mr. Hanbury - who put a hold on the stock just before the price fell dramatically in February - said Thursday that the bank's stock could run up to $57 within 12 to 18 months.
The bank's revenue remains weak, he said, but the California economy should start to boost revenue by year end.
Better Earnings Seen
As a result, he increased his earnings estimate by 15 cents to $5.25 for this year and by 25 cents, to $5.60 for 1995. He upgraded the stock to "above average" from "average."
A number of analysts have already upgraded the San Francisco-based holding company, so Mr. Hanbury's action had little impact in the market.
The stock opened the day up slightly, but the gain quickly disipated into a loss by late-morning.
The stock closed at $49, down 50 cents.
"Our rating has been buy for quite a while," said Ron Mandle of Sanford C. Bernstein & Co., Inc. He said the bank's stock should rise above $60 in the next 12 to 18 months.
Others Disagree
Skepticism on the part of other analysts continued to weigh down the stock, however.
Lawrence R. Vitale of Bear, Stearns & Co., maintains a "hold" rating on the stock, saying it seems to be stuck at under $50.
The company's revenue dropped $100 million from the fourth to the first quarter. The second quarter will no doubt show improvement, he said, but the impact of the pending merger with Continental Bank Corp. on the third quarter results remains uncertain, he said.
Better to Be Had?
Analysts also questioned whether now is the right time to upgrade the stock. Anytime a stock has risen by more than 20 percent in a short period, a pause can be expected, said Lawrence W. Cohn of Paine Webber Inc., who upgraded BankAmerica late last year.
Still another view holds that BankAmerica isn't the best play on California.
First Interstate, which reportedly spurned an acquisition offer by Wells Fargo & Co., nevertheless has risen for much of this year on merger speculation, and on the strength of a stock buy-back plan and dividend increase.
First Interstate fell 75 cents to $78.25 on Thursday, and has lost 8% of its value in the last month.
But analysts said First Interstate could be poised to bounce back again. Periods of profit taking in an improving market are to be expected, said Carole Berger, of Salomon Brothers.
Upturn Expected
"I think [First Interstate] has to be very close to the bottom, unless there is a widespread market downturn," added Claire Percarpio, equity analyst with Duff & Phelps.
First Interstate's earnings have risen dramatically, the franchise is excellent, and the state's economy is recovering, she said.
Clearly, she added, there are plenty of potential acquirers for First Interstate, including Wells Fargo.
Wells stock closed at $157.36, up 50 cents for the day.
Market Mixed
Major banks stocks were little changed Thursday, with no major bank moving up or down more than a fraction of a point.
Shawmut National Corp. was off 50 cents to $23.325. Earlier in the day the shareholders of Gateway Financial Corp. approved its acquisition by Shawmut.
Banc One Corp. gained half a point, while Fleet Financial Corp. rose almost a point.
The Dow Jones Industrial average ended the day up 3.69 points at 3,753.14.
