Barnett Banks Inc. appears to have gained substantial ground in the stock market at the expense of NationsBank Corp. in the wake of the North Carolina bank's decision to acquire Boatmen's Bancshares.
The healthy price that NationsBank will pay for the St. Louis banking company has depressed its stock value while serving notice that the most desirable merger targets - presumably including Barnett - will likely command major premiums.
As the remaining major bank based in Florida, Barnett is seen by Wall Street as a trophy franchise for a number of superregional banking companies who would like to invade the Sunshine State.
Barnett shares jumped nearly 4.5% in value in the two days after the NationsBank-Boatmen's transaction was announced. After some profit taking, the stock has posted further gains this week.
At the end of the day Wednesday, Barnett stock sold at $66.75, up from $64.50 on Aug. 29, the day before the deal was unveiled.
In contrast, NationsBank shares have slumped 10% from their level before the deal. Wednesday its shares traded at $84.125, versus their value of $92.375 the day prior to the Boatmen's announcement.
Lehman Brothers market strategist Jeff Applegate last week advised swapping out NationsBank and into Barnett, after adding the banking company to the New York firm's 45-stock recommended list.
"Barnett is a takeover stock without a takeover premium," said Lehman regional bank analyst Michael L. Mayo, who rates the Florida bank a "buy" with a 12-18 month price target of $75.
Mr. Mayo cut his rating on NationsBank to "outperform" from "buy," and the shares were dropped from the recommended list. The other bank stocks on the list are Boatmen's and Banc One Corp.
Barnett shares have also benefited over the past several weeks from increased investor interest as a result of a recent two-for-one stock split.
Elsewhere, analyst George M. Salem of Gerard Klauer Mattison & Co. restored a "buy" rating to Chase Manhattan Corp., with a 12-month price target of $95. He said the bank's credit card loan quality is "better than we believed." Chase traded Wednesday at $78.25, up $1.25.