Surprisingly strong first-quarter earnings and a positive analysts meeting have given a big boost to Bankers Trust New York Corp.'s stock.
Shares closed at $70.125 on Thursday, up $1.875, as the bank built on the momentum from earlier in the week when it announced better than expected results.
"People came away from the meeting feeling that the biggest problem areas of the bank are being addressed," said Lawrence W. Cohn, a PaineWebber Inc. analyst who attended Wednesday's session.
Bankers Trust reported an increase of more than 50% in derivatives revenue over the first quarter of last year. The unit's business had suffered a sharp drop in revenue last year in the wake of a scandal in which the bank was accused by some clients of misleading sales tactics.
"Prior to this year, they were using plain-vanilla, low-margin" derivative products, said Mr. Cohn. This year, he said, "Customers have come looking for more complex structures."
An opportunity to meet the company's new management - particularly Frank Newman, who became chief executive in January and chairman early this week - also helped boost analysts' confidence, said Lawrence Vitale, an analyst at Bear, Stearns & Co.
"They brought in people that have a lot of credibility and that has brought a fairly high degree of expectation," said Mr. Vitale. "Frank Newman was successful at engineering turnarounds at other institutions; people think he will able to do the same thing here."
Separately, Deutsche Morgan Grenfell/C.J. Lawrence Inc. upgraded Fleet Financial Group to "buy" from "hold." The firm said the Boston-based company is poised for a stronger second half, on cost savings related to its merger with Shawmut National Corp. and its pending acquisition of National Westminster Bancorp. Fleet shares rose 37.5 cents to $42.25.
The stock of First USA Inc. rose $57.625, up $2.25, on news of an upgrade from Alex. Brown & Sons.
Analyst Mark Alpert upgraded the credit card specialist to "strong buy" from "buy" based on "its low valuation relative to earning and receivables."
Mr. Alpert noted that First USA expects receivables to grow an average of $1.5 billion per quarter. The figure stood at $18.3 billion at the end off the first quarter.
Mr. Alpert raised his earnings per share estimates to $4.19 for 1996 and $4.69 for 1997.
Firstar Corp. shares surged $1.87 to $44.50 after the company was included in the S&P 400.
Bank stocks generally were hurt in morning trading when a Federal Reserve Bank of Philadelphia report of manufacturing growth raised fears of higher interest rates. But by the end of the day the S&P bank index was up 0.58%.