How high can bank stocks fly? Their exuberant performance has Wall Street analysts teetering between optimism and caution.

"Every time we set a price target, the market blows it out," said Raphael Soifer of Brown Brothers, Harriman & Co. "It can't last forever, but it's nice while it's happening."

So far this year the American Banker index of the 225 largest bank stocks is up a sizzling 28.8%, versus a 20.02% gain for the Standard & Poor's 500 stock index and 19.7% for the blue-chip Dow Jones industrial average.

Jay Suskind, head of trading for Ryan, Beck & Co., West Orange, N.J., said banking has been "one of the strongest sectors-if not the strongest- out there."

The banks have been on this winning streak since 1995, and as bank stocks hit ever-loftier heights, analysts have been forced to reevaluate companies near their predicted target prices.

On Thursday, Mr. Soifer, only a moderate bull on banks, upped his 12- month target price for six banking and financial services companies to reflect a significant expansion in market valuations.

On the other hand, analyst Diane Glossman of Salomon Brothers, sliced her rating on Bank of New York Co. to "buy" from "strong buy" as the stock approached her target price.

Joining Mr. Soifer on the optimistic side, Michael L. Mayo, of CS First Boston, upped his target price for First Chicago NBD Corp. on Wednesday. "I think it can go into the $70 range," he said. The stock was up 75 cents on the day, at $65.375

"Everyone's asking 'What's the catalyst for banks?"' Mr. Mayo said. "When their stocks are trading at a little more than two thirds of the market's price-earnings, they don't need a catalyst. Banks still have room to improve." Historically, banks have traded at a 30% or so discount to the overall market on a price-to-earnings basis.

Mr. Soifer thinks shares of Chase Manhattan Corp. should rise to $121 in the next 12 months, compared to his earlier estimate of $107. The stock ended the day's trading at $103. He bumped up his Citicorp expectation $13 to $138. Citicorp closed at $123.875, up $3.125.

He expects a significant leap from BankAmerica Corp., raising his estimate to $153 from $122-before Wednesday's 2-for-1 stock split. The stock now trades at $68.50, up $1.125 on the day.

Ms. Glossman pointed out that Bank of New York "has been one of the best performing names in the bank group in the year to date, appreciating by 41.1%, compared with 22.6% for the (Salomon) 50 bank index." Ms. Glossman expects the stock to rise from $47.875 to $55.

J.P. Morgan & Co. also got a nod from Mr. Soifer. The stock was recently downgraded by several analysts last week as the bank said it anticipated lower trading revenue in the second quarter over the first. Mr. Soifer, however, expects the stock price, which is just about $1 shy of his earlier target of $110, to jump to $118.

U.S. Trust Corp., which closed at TK, could hit $57 in the next 12 months, Mr. Soifer said the small bank is "fool proof." He upped his expectations on Merrill Lynch & Co. to $67 from $50.

His long-term rating on the group remains "outperform."

A big factor in the recent strength of banks has been the resurgence of takeover rumors, which have swirled incessantly for the past several weeks.

On Thursday the S&P bank index kept pace with a bull market, up .88% to 562.25. The S&P 500 rose .99% to 897.99, while the Dow Jones, helped by a rallying technology sector, rose 58.36 points, or .76%, to 7777.06

American Express has gained $4.75 since Friday, when rumors of a CIticorp buyout resurfaced. While several industry sources insist it isn't so, speculation remains rife. The stock was off slightly today, closing at $77.75, down 12 cents.

Shares of Advanta Corp., the monoline card issuer, benefited on Wednesday from speculation that the troubled issuer was close to a deal with National Australia Bank. It rose $2.75 on Wednesday. On Thursday, shares of the A class stock closed off 62 cents to $34, while the class B shares dropped 87 cents to $32.125.

State Street Bank jumped 6% Thursday on takeover rumors and news that the bank will be added to the S&P 500 index. The stock gained $3 to close at $52.87.

And Donaldson Lufkin & Jenrette Securities Corp., the investment firm, gained $2.50 on news of a possible sale, ending the day at $62.625, a 4% increase.

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