BankBoston Corp. may put itself up for sale if its stock remains in the doldrums, according to one Wall Street bank analyst.
In a meeting last week, the analyst said, BankBoston's chief executive officer said the company will "assess its strategic alternatives" if its good performance is not eventually reflected in the stock price.
Among analysts and investors, those are code words for the possibility of a sale.
CEO Charles K. Gifford's remark "was quite noteworthy," said the analyst, Michael L. Mayo of Credit Suisse First Boston. "We took BankBoston from the back burner to the front burner after we got back from that meeting with management."
On Wednesday, Mr. Mayo issued a note to clients stating that BankBoston is "comfortable meeting consensus estimates" and committed to its share price.
"BankBoston is one of the cheapest banks, based on a sum-of-the-parts analysis," Mr. Mayo wrote. "Management is intent on unleashing this value, knowing that if it does not someone else will do it for them."
During the day, BankBoston's shares surged as much as 3.5% on the news. It closed up 93.75 cents, at $35.4375.
BankBoston has long been on the short lists of banking industry takeover candidates. The company would be an ideal way for a large regional bank to enter slow-growing but still important New England. In addition, BankBoston has long-standing relationships and expertise in Latin America
In a recent report, Lehman Brothers listed Bank of New York Corp., Bank One Corp. BankAmerica Corp., Chase Manhattan Corp. and First Union as companies that would combine well with BankBoston. All could pay the takeover premium that BankBoston would ask if it were to put itself on the selling block, Lehman said.
But the question is: Would the company actually consider selling now?
Almost a year ago, BankBoston celebrated when its stock price rose above $100 a share. Later the stock was split 2-for-1. But today the shares are well below last year's valuation.
It is clear that investors worry about the price and the company's ability to handle what seem to be ever-growing problems in Brazil.
"BankBoston has always said that it would look out for the shareholder," said bank analyst Diana Yates at A.G. Edwards & Co. "I think what Gifford is concerned about is investors not valuing the company for what it is worth."
BankBoston's shares are down because most investors cannot stomach the volatility in Latin America, Ms. Yates added. But the company has proven itself, she said.
"They have been in Brazil for 50 years and in Argentina for 80 years. In fact when the (Brazilian) real devalued, the company made money.'
But some market experts are less bullish.
"BankBoston has always been adept at maneuvering through Brazil's economic difficulties," said bank analyst Michael Granger of Fox-Pitt Kelton. "However, the devaluation of the real has added a greater level of uncertainty, which makes one question the company's growth in the long term."
Bank analyst Anthony J. Polini of Advest Inc. said BankBoston and other banks should consider selling now.
"We do not believe bank stocks will achieve new highs over the next two years," said Mr. Polini. "And at this point, we still have enough large regionals that can buy other banks. We should be seeing more deals now."
