Natwest Securities Corp. analyst Stephen Berman upgraded Chemical Banking Corp. to "buy" from "hold," saying the outlook for all money- centers was bright.

Stable interest rates and earnings consistency, bolstered by stock buybacks and cost cutting programs, should improve the outlook for money- centers, he said.

"Money-centers are in the midst of a potentially strong revaluation with limited downside and 15% to 25% upside in the next 12 months," Mr. Berman said

For Chemical, Mr. Berman predicted a 20% to 25% upswing in share price in the next 12 to 18 months. Accordingly, he set a $53 price target on the stock.

Chemical finished up 12.5 cents at $41.375 in modest trading Thursday.

Banks in general have been a laggard sector, Mr. Berman added, echoing value investors like Michael Price and Warren Buffett, who have increased their stakes in banks hoping to take advantage of a rebound.

With high dividend yields and steady earnings growth, bank stocks should improve, Mr. Berman said.

Chemical managed to meet first quarter consensus estimates of $1.34 per share, despite terrible trading revenues, Mr. Berman said.

Earnings in the second quarter should be far better as trading rebounds and the impact of the bank's cost-cutting initiatives become widely felt, he said.

In 1995, the bank's earnings should rise by 25% to $6.20 per share, followed by another strong year in 1996, he said.

By 1998, he predicted, earnings could be as high as $9 per share, and the stock price could hit $75.

Mr. Berman downplayed the money-center's first-quarter loan loss provision, which represented the first increase since 1991.

The provision will continue to rise, he said, because of increases in credit card volume on the bank's cobranded credit card with Shell Oil Co..

"Underwriting, retention, and loan portfolio management policies have improved substantially for Chemical, and we expect this company to demonstrate excellent credit quality over the next few years," Mr. Berman said.

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