The four credit card specialists rallied Wednesday as investors homed in on companies that have lagged the market during the recent euphoria.
"Clearly as people start the new year they are looking for bargains," said Moshe Orenbuch, analyst at Sanford C. Bernstein & Co.
The buying pushed shares of MBNA Corp. up $1 to $37.75; First USA Inc. shares gained 87.5 cents to $45.25; Capital One Financial Corp. stock went up $1 to $24.375, and Advanta Corp.'s class A common shares rose $1.187 to $38.812, while its class B stock gained 31.5 cents to $35.812.
Mr. Orenbuch said concerns over consumer credit quality that arose in the fourth quarter had hurt the companies' shares - and that they were left out of the rally on that pushed the Dow Jones industrial average up 60.33 points to 5177.45 Tuesday.
Now, he said, the stocks are attracting new interest, as investors take a closer look at the companies' business.
For example, MBNA, whose shares have fallen from a 52-week high of $42.75, is likely to weather a downturn better than that drop suggests, Mr. Orenbuch said. Since its founding in 1982, he said, the Delaware-based affinity card specialist has kept losses well below industry averages during downturns.
First USA, and to a lesser extent Capital One and Advanta, will enjoy rising yields with the expiration of low introductory rates on recently issued cards, Mr. Orenbuch said. "The yield going from 6% to 13% more than offsets loss going 0 to 5%," he said.
In other market news, shares of PNC Corp. dropped $1.437 to $30.125 in response to news of a $388 million charge (see page 4) and downgrades by Michael Mayo of Lehman Brothers and Anthony Davis of Dean Witter Reynolds Inc.
Both analysts said their downgrades were unrelated to the charge. PNC shares have simply become too pricey, they said.
Mr. Mayo downgraded the stock to "hold" from "buy" and removed it from Lehman's recommended list. Mr. Davis lowered PNC to "neutral" from "accumulate."
Bank of Boston Corp. shares fell 62.5 cents to $45 after Diane B. Glossman of Salomon Brothers upgraded the stock to "buy" from "hold." Ms. Glossman said the bank's merger with BayBanks Inc. will benefit shareholders.