After taking a severe beating in the stock market last week, shares of Bankers Trust New York Corp. and J.P. Morgan & Co. on Monday appeared to be making a comeback.

The recovery for the two trading powerhouses was driven by Banker Trust's settling a lawsuit over its sales practices and a recommendation of beth companies by PaineWebber Inc. In trading Monday, Bankers Trust's stock had gained $1, rising to $58.125. Earlier last week, the bank's stock fell to a new year low of $54.75.

J.P. Morgan's shares were ahead by $1.125 to close at $59.

Morgan last week hit a new low for the year of $55.375.

Bankers Trust said just before Thanksgiving that it had entered into an out-of-court settlement with Gibson .Greetings Inc. in a widely watched lawsuit over some soured derivatives transactions.

Although, it was the smaller of two lawsuits filed against Bankers Trust, it was a symbol to many investors of the volatility of the derivatives business in which Bankers and Morgan are major players.

Bankers Trust said it canceled its open derivatives contracts with Gibson, which will pay Bankers Trust $6.18 million in return. Gibson had sued for $73 million on contracts worth about $19.7 million.

"To the extent that they can get this behind them it helps," said PaineWebber Inc. analyst Lawrence Cohn.

Mr. Cohn pointed out that the Gibson Greetings suit was much smaller than a lawsuit by Procter & Gamble Corp. that is still pending. But he said he thinks the bank's problems in the derivatives market are close to being solved. 'I think a Procter & Gamble settlement is not far behind," he added.

Other analysts are not so optimistic.

Brown Brothers Hardman & Co.'s Raphael Softer said he does not see a settlement by Procter & Gamble anytime soon.

"With P&G out there, the Gibson settlement removes only a relatively small cloud," he said. "Gibson was able to settle its debt with Bankers Trust for 30 cents on the dollar. But BT and P&G both said they will not settle."

Both analysts agreed the negative publicity surrounding Bankers Trust's derivatives activities has been reflected in its stock for months now.

PaineWebber's Mr. Cohn went so far as to upgrade his ratings on Bankers Trust's stock Monday, raising it to "buy" from "neutral."

He also raised his rating on J.P. Morgan & Co.'s stock to "buy" as well, for similar reasons.

Mr. Cohn said Morgan's stock could still fall as the bond market continues its downward slide, but that it would stabilize once the bond market levels off.

He also noted that Morgan, which relies heavily on its trading revenues, stands to gain once the Fed reverses course and starts easing credit.

Mr. Cohn said the market had already discounted the worst news on Bankers Trust's stock and that concerns on how its derivatives dealings will affect its earnings have been overblown.

"The bond market was horrible last week," be said. "That triggered a correction for the whole industry ."

Brown Brothers' Mr. Soifer said that Mr. Cohn's upgrading both Bankers Trust's and J.P. Morgan's stock had an affect on their prices Monday.

"When a big retail firm [like PaineWebber] upgrades, it has a big effect," he said. "You have all those salesmen out there making phone calls."

Mr. Soifer said that after a loss of 28% in the value of Bankers Trust stock this year, he recommends it as a long-term investment.

"It's a cheap stock for investors," he said. "The people worried about their derivatives dealings have already sold their stock. But we're still bearish on stocks and bonds in the short-term."

Separately, Frank J. Barkocy of Advest Inc. reduced his 1994 earnings estimates on PNC Bank Corp. to $3.15 per share, from $3.20. He also reduced his 1995 estimates to $2.70, from $3.35.

The analyst said he lowered his estimates because the Pittsburgh-based bank is still highly interest-rate sensitive and that it's net interest margin has been negatively affected.

Mr. Barkocy also said that while he has removed his "buy" rating on the stock, he still thinks PNC's shares are appealing to investors looking for dividend yield and rates them "accumulate." PNC's stock was unchanged at $20.75.

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