By WILLIAM GOODWIN
Bank of Boston Corp., whose price has doubled this year, is still one of the market's favorite cyclical plays.
On Wednesday, the stock got a further lift from one of its biggest boosters on Wall Street.
Impressed that the bank's credit quality was improving faster than he had expected, Thomas Brown, an analyst with Donaldson Lufkin & Jenrette Securities Corp., issued a "tablepounding" buy on Bank of Boston Wednesday.
That sent the stock up $1, to $23,625, on exceptionally heavy volume of 1.67 million shares.
A Second Supporter
Further support was provided by Lawrence Cohn, an analyst at Paine Webber Inc., who talked up the stock Tuesday at a meeting with his firm's Northeast regional branch managers.
Despite its eye-popping runup this year, Bank of Boston trades at a discount to other regional bank stocks.
"It still looks kind of cheap," said Livia Asher of Merrill Lynch & Co.
At current levels, Bank of Boston trades at a premium of 22% to its book value of $19.38 a share, compared to an average premium to book of 70% for regional banks, Ms. Asher noted.
"We're looking for the stock to rise to $35 over the next 12 to 18 months," Paine Webber's Mr. Cohn said.
DLJ's Mr. Brown expects the stock to rise to $30 by yearend and hit $40 by mid-1993.
Following a chat with Bank of Boston management Tuesday, Mr. Brown concluded that his estimates of the company's loanloss provision and expenses for other real estate owned were too high.
As a result, he raised his 1992 earnings estimate to $2.50 a share, from $2.35, and lifted his 1993 estimate to $3.35, from $3.
Others, though, are less bullish about the bank.
"We think New England banks have moved up rapidly in the face of earnings that will continue to be hampered by a lackluster economy," said Diane Glossman of Salomon Brothers.
As a result, Salomon is not recommending any New England bank stocks at the moment.
Mr. Brown, however, believes the New England economy is showing clear signs of a rebound and that investor perceptions of the region will improve "dramatically."
Analysts also expect Bank of Boston to make more government-assisted acquisitions of assets from seized institutions in New England.
On Friday, Bank of Boston said it acquired nearly $200 million in deposits from failed Workingmens Co-Operative Bank, Boston.
Such deals will cut Bank of Boston's funding costs, as the bank uses the deposits to replace higher-cost funds, such as brokered CDs.
Today, more than 80% of Bank of Boston's loans are funded by core deposits, compared to about 50% several years ago.
Gerard Cassidy of Tucker Anthony Inc. also looks for the bank to make an acquisition without government assistance, in a bid to further increase its New England franchise.
He said Multibank Financial Corp. in Dedham, Mass., would make a natural fit, giving Bank of Boston a retail franchise in areas of the state where it is not particularly strong.