Shares of BankAmerica should rank alongside International Business Machines Corp. and Merck as a prime holding in stock portfolios, one Wall Street analyst contends.
"The shares should be considered the bluest of blue chip U.S. bank stocks and should be a core holding in quality growth accounts," said Thomas D. McCandless of CIBC Oppenheimer.
The analyst's bullish forecast is a bit of good news for a stock that has come under pressure several times since the huge combination of BankAmerica and NationsBank closed last Sept. 30.
In an updated assessment, Mr. McCandless thinks the merger is moving ahead at a pace that is likely to ensure strong results for the company.
"Management deserves accolades for deploying a strategic game plan that envisioned the end game in banking consolidation," he said. "The old NationsBank management has a very successful template for bank merger integrations, and we have no reason to believe they've lost their playbook."
Shares of BankAmerica closed unchanged Tuesday at $60.
The analyst's review follows a weaker-than-expected fourth quarter at BankAmerica, which prompted other bank watchers on Wall Street to lower expectations. But Mr. McCandless is optimistic.
"In essence, the story for the foreseeable future is rightsizing, refining and profits rebounding," he said. "Ultimately, this unique franchise cannot be replicated."
Though the company suffered the high-profile departure of David Coulter, who had been chief executive of the old BankAmerica , the company has retained much of the top talent that made it an industry leader, Mr. McCandless said, noting, "Management appears to have secured the vast bulk of targeted executives on the West Coast."
In reiterating his "strong buy" recommendation for shares, Mr. McCandless said BankAmerica has dominant shares in 20 of the nation's top growth markets. He said the company is likely to deliver earnings-per-share growth of at least 25% in 1999, "with very strong momentum thereafter."
"The scale and scope of the integration signal a multiyear effort," Mr. McCandless said. "But unquestionably there is tremendous economy of scale created by a merger that drives, ultimately, a technology advantage."
Globally, BankAmerica will probably revamp some operations, he said. "We expect management to reassess its retail international presence, but we believe the company will not make such Draconian cuts as to disenfranchise the old BankAmerica global powerhouse franchise."
Reducing BankAmerica's presence in selected overseas markets may result in a variety of nonrecurring gains and losses in 1999, Mr. McCandless said.
BankAmerica was not the only banking company to receive an upbeat assessment on Tuesday. Shares of BankBoston fell 18.75 cents, to $34.50, after an upgrade to "buy" by Carla D'Arista at Friedman Billings Ramsey & Co.
In raising her 1999 estimate by 10 cents, to $3.18 per share, and setting a 2000 estimate of $3.14 per shares, Ms. D'Arista cited an improving outlook for mutual funds, personal trust fees, syndicated loans and trading profits.
She forecast 18% noninterest income growth for 1999.
The evaluation came as the Standard & Poor's bank index was losing 1.15% and the Dow Jones industrial average was off 1.70%. The Nasdaq bank index dipped 0.29% and the S&P 500 was off 2.22%.
Citigroup lost $1.4375, to $51.0625; Chase Manhattan Corp. was down 1.125, to $72; and J.P. Morgan was up $1.25 to $100.50.
Among regionals, Fleet Financial Group fell 93.75 cents, to $39.9375; KeyCorp 43.75 cents, to $30.0625; and PNC Bank Corp. $1.0625, to $47.625.