Shares of Countrywide Credit Industries, the nation's largest mortgage banking company, slipped Friday after losing a "buy" rating from Prudential Securities Inc.

Analyst Thomas O'Donnell lowered his recommendation to "hold," citing Countrywide's 25% price gain this summer as well as concerns about the impact of future moves in interest rates.

The company's stock was off $87.5 cents to $32.125 during late trading.

Refinancing Boom

The mortgage banker's price run-up is linked to a summer boom in mortgage refinancings - the fourth such surge in the last two years - as interest rates have steadily fallen.

"Most of the positive impact of the current mortgage refinancing boom is already reflected in the share price," Mr. O'Donnell said.

"Even if rates remain at current levels, or below. and the boom continues, [price] upside in Countrywide will likely be limited, near-term,' he said.

Up in March, Down in May

On the other hand "a rate rise, by slowing [home loan] production, could put downward pressure" on Countrywide shares.

The stock surged last March, after a significant decline in long-term interest rates began, presaging a new round of mortgage refinancings.

But in May, when investors feared inflation was rebounding and rates might rise, Countrywide shares fell sharply.

They began climbing again after the scare passed and have risen through the summer as economic indicators have remained sluggish.

New Drop in Some Rates

While rates are hard to predict, the continued sluggishness in the economy and low level of inflation indicated last week by government reports has prompted a new decline in some rates.

Mr. O'Donnell said the low interest rate environment that stimulates mortgage refinancings and production of new loans also carries risks for the earnings of mortgage bankers because it increases the run-off of loans from the servicing portfolio and accelerates amortization of servicing rights.

Risk Seen as Offset

Mortgage bankers have two main sources of earnings: from the origination of loans and their sales into the secondary market, and from servicing loans for a fee.

Over the past three quarters. Countrywide has offset the risk to earnings from portfolio run-off by assuming a higher rate of amortization in its $69.2 billion servicing portfolio, Mr. O'Donnell noted.

But other analysts say the company is still trading at a discount to its rapid earnings growth rate.

Other Views

Analyst Sy Jacobs of Alex. Brown & Sons Inc. has a "strong buy" rating on the stock. He said Friday he was "as bullish as ever," believing Countrywide will fare even better against competitors if rates rise.

Mr. O'Donnell acknowledged that, longer-term. Countrywide is in an enviable position as the mortgage industry leader.

The company is admired on Wall Street for using its economies of scale and advanced technology to apply pricing pressure and gain market share from competitors.

Record Year Expected

During some periods over the last two years, the stock has ranked among the hottest-performing issues on the New York Stock Exchange

The company has said it is on track to produce $40 billion in home loans this year, up 30% from last year's record pace. Within five years, Countrywide hopes to seize 6% of the nationwide mortgage market, as measured by originations. It has 3.8% currently.

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