BankAmerica Upgraded on Improved Performance

BankAmerica Corp. got a lift Monday from Smith Barney Inc., which upgraded its shares because of improved performance.

Bank analyst Henry C. "Chip" Dickson raised the rating of the San Francisco banking giant to "buy" from "outperform." He also raised his price target to $90, from $80.

BankAmerica shares rose $2.125, to $74.312, on a day when bank stocks seesawed in nervous trading amid investor anxiety about interest rates.

Mr. Dickson said that the $258.4 billion-asset company's earnings growth has improved as it has shed poor performing business lines and continued to manage its capital effectively.

He said he expects the company to tally an annual earnings growth of more than 14%.

"A year ago BankAmerica had 10 business units with returns below the cost of capital," Mr. Dickson said in a report. "Now there are three business units" in that kind of shape, he said. "The other seven were fixed or sold."

BankAmerica has established a record of improving the performance of its various business lines and expressed confidence that they will continue to do so, he said.

Mr. Dickson also says that company also has effectively managed its capital through a generous share repurchase program.

Meanwhile, he said he thinks the stock remains relatively affordable when the company's robust outlook is considered.

Indeed, BankAmerica has become something of a Wall Street favorite while its principal rival, Wells Fargo & Co., struggles to regain its balance after its acquisition of First Interstate Bancorp.

According to First Call Corp., the consensus recommendation is a "buy" and earnings estimates for 1997 and 1998 are $4.31 and $4.86, respectively.

Even analysts without current buy ratings on the bank still like the company.

Analyst Katrina Blecher of Gruntal & Co. remains bullish on the company despite her "hold" rating.

Ms. Blecher said she expects the returns from venture capital to be "phenomenal" and trading also to be strong.

"The company also does not have to go out and make foolish acquisitions, which should give shareholders a sense of security." she added.

And Raphael Soifer of Brown Brothers, Harriman & Co., who has a short- term "hold" on the company, agrees that BankAmerica has strong fundamentals but observed most bank stocks right now are "not cheap on a historical basis."

Meanwhile, banks stocks seesawed in nervous trading as a result of falling bond prices.

Figures released by the Commerce Department show personal income and spending met expectations, said economist Scott Brown of Raymond James & Associates, St. Petersburg, Fla. However, investors are still anxious, because such figures tend to be revised higher at the end of the quarter.

Mr. Brown also pointed out that though "no one expects Alan Greenspan to raise interest rates on Tuesday," investors still are looking at Friday's unemployment numbers which may indicate slight inflation.

The Standard & Poor's bank index rose 0.89%, while the Dow Jones industrial average increased 0.87%. The S&P 500 grew 0.86%, and the Nasdaq bank index grew 0.32%.

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