Citicorp shares jumped in Thursday's market after George M. Salem of Prudential Securities Inc. awarded them his highest investment rating.

The New York bank advanced $1.125 to $44.875 after the analyst termed Citicorp his "single best idea," saying it was being "grossly undervalued" by investors.

"Incredibly, Citicorp's 1995 price-earnings ratio is the lowest in our universe," he said, "yet it probably possesses the best growth prospects" among that nationwide group of 16 major hanks.

Mr. Salem raised his one-year target price on the stock to $60 from $55, meaning possible price appreciation of 36%. He said he expects a 50% dividend increase within six months.

The analyst based his upbeat view on the bank's large presence in the foreign markets, where it derives 80% of its earnings, and especially its activities in emerging markets of developing countries.

Only about 20% of Citicorp's expected earnings this year will come from wholesale lending, trading, capital markets operations, and other activities associated with money center banks, he said.

"Investors must alter their thinking and not view or value Citicorp today as a money center bank," Mr. Salem asserted.

"In many respects, it is comparable to other global consumer growth companies like CocaCola, Procter & Gamble, and Colgate,"he said.

These companies currently sell at an average of 15 times their anticipated 1995 earnings, he pointed out, while Citicorp sells at a much more modest 6.7 multiple.

Citicorp operates as a consumer bank in more countries than any other United States bank.

Mr. Salem iaid he thinks Citicorp sells at such a discounted level because "investors have not fully reconized nearly complete three-year transformation from a troubled and controversial company to a well-positioned growth stock."

Citicorp was forced to omit its dividend for several years as a capital-raising measure while it struggled to build reserves against a mountain of problem loans. Because of its size and prominence in the bunking industry, Citicorp's woes drew the attention of investors.

But Mr. Salem said Thursday he firmly believes Citicorp's "problems are behind it." At the same time, it is better positioned than any of the nation's other banks to benefit from current global economic trends."

If viewed among major U.S. consumer products companies, Citicorp ranks third in foreign sales as a percentage of total sales with 64.5%. Only Gillette at 67.5% and Coca-Cola at 67% are higher.

Shares of both Gillette and Coke trade at 20 times likely 1995 earnings. Mr. Salem said he thinks Citicorp should realistically wade at a 9.2 multiple.

"It is from the emerging markets especially that we-believe Citicorp deserves a material price-earnings upgrade," he said. "This year, Citicorp will derive about 45% of its nest income from emerging markets, principally in Asia and Latin American," he said.

"Earnings in these countries are growing at 20% per year for Citicorp," he noted.

Citicorp replaces Norwest Corp., Minneapolis, as Mr. Salem's top pick among bank stocks. But the analyst retained his "buy" rating on Norwest.

"Our view is that Norwest will still grow at a handsome 15% annual rate," but Citicorp should grow "much faster" and also expand its multiple.

Mr. Salem raised his earnings estimates for the New York bank to $5.10 a share this year from $4.80 previously and to $6.50 for next year from a prior forecast of $6. Last year, Citicorp earned $3.70 a share.

Among other bank stocks on Thursday, Chicago's Northern Trust Corp. was up $1 to $38.50; MBNA Corp., the credit card issuing bank, was up 37.5 cents to $24.875; CoreStates Financial Corp. gained 37.5 cents to $28.375; and Mellon Bank Corp. advanced 87.5 cents to $59.50.

Meanwhile, First Chicago Corp. was off 62.5 cents to $49.75 and Signet Banking Corp. was down 75 cents to $37.

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