Stocks: Megamerger Buffets Banks that Are Not in Play

The merger-driven rally in bank stocks this week has taken some nonmerger candidates along for a bumpy ride.

A notable example is Bankers Trust New York Corp. The stock hit a record high Tuesday, closing at $60.50 a share, up $2.125, only to fall back $1.125 a share to $59.375 on Wednesday after Oppenheimer & Co. analyst Christoph Kotowski advised clients to "swap out" of the stock and buy shares of Bank of New York Co., which he said is more likely to be involved in a merger.

Bank of New York closed at $35 a share, down 75 cents.

|No Merger Play'

"There's absolutely no merger play" in Bankers Trust, agreed Raphael Soifer of Brown Brothers Harriman, who thinks the stock has gotten ahead of itself on a short-term basis.

Investors have been bidding up bank stocks indiscriminately all week, following news on Monday of the banking industry's latest megamerger - that of Bank-America Corp. and Security Pacific Corp.

Mr. Soifer said Bankers Trust stock has also been rising on the bank's exceptionally strong trading profits in the first half of this year, but he questions whether those results are sustainable.

"Investors tend to think those profits are more repeatable than they are likely to be," he said.

Bankers Trust is currently trading at about 10 times Mr. Soifer's 1992 earnings estimate of $6 a share, "which is not a cheap price," the analyst said.

However, his earnings estimate is at the low end of the range of analysts' projections.

A Bankers Trust Bull

James Rosenberg at Shearson Lehman Brothers, who strongly recommends Bankers Trust, expects the bank to earn $8.50 a share on an operating basis in 1992.

Meanwhile, Mr. Kotowski of Oppenheimer also told clients Wednesday to swap out of Norwest Corp. of Minnesota and buy shares of a handful of banks in Michigan, where the prospects for consolidation are greater.

Among the Michigan banks he mentioned are Comerica Inc., Manufacturers National Corp., and NBD Bancorp.

All of those banks are at least as good as Norwest and are trading at "significantly cheaper valuations," Mr. Kotowski said.

As for the big New York banks, Mr. Soifer compares the situation of Bankers Trust and J.P. Morgan & Co. - another unlikely merger prospect - to that of Morgan Stanley & Co.'s situation during the consolidation of the securities industry in the 1980's.

Morgan Stanley grew internally, rather than through acquisitions, thus avoiding the pitfalls of consolidation.

"They didn't buy E.F. Hutton," Mr. Soifer said, in a wry allusion to the troubles that have beset Shearson as a result of its purchase of Hutton.

PHOTO : Past the Peak? Sources: DB Technology Inc., Reuters

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