Wall Street’s debate over FleetBoston Financial Group rages on.

On Friday, a day after Prudential Securities analyst Michael Mayo placed a “sell” recommendation on FleetBoston, the shares were hit with a downgrade from Citigroup’s Salomon Smith Barney. Salomon’s Ruchi Madan, lowering her recommendation of Fleet to “outperform” from “buy,” also cut her estimate on Fleet’s first and second quarter earnings per share by six cents each. That would amount to first quarter earnings of 75 cents a share, below the consensus of 84 cents. Shares of Fleet fell, 4.4% to $38.70. The American Banker index of 50 bank stocks fell 2.79%, and its index of 225 bank stocks fell 2.42%.

The company’s exposure to capital markets was cited in both Mr. Mayo’s and Ms. Madan’s analyses.

But it’s not as if Wall Street has lost any affection for Fleet. Last week AG Edwards upgraded Fleet shares to “accumulate” and on Friday, as Salomon was downgrading the stock, CIBC reiterated a “strong buy” rating.

The differences may stem more from the time frames and areas of emphasis chosen by analysts than a real difference of opinion over the company’s business model.

Anthony Polini, an analyst at Advest in New York, says investors should ride the tide until the second half of 2001. Polini maintains his “buy” rating and his $3.45 earnings per share estimate. Ms. Madan lowered her 2001 estimate from $3.70 to $3.50.

“You are going to have skewed earnings in the first half,” he said. “Clearly it is a buying opportunity.”

Indeed, Ms. Madan said in a research note that she expects stronger earnings in the second half of 2001. “While we believe there is near-term earnings risk at Fleet, the valuation is compelling from a longer-term point of view,” she said.

The analyst downgraded Fleet Shares largely because of weaker-than-expected revenue from capital markets. Investment banking in the high-tech and Internet-related areas — the sectors in which Fleet’s San Francisco investment bank, Robertson Stephens & Co., specializes — is expected to continue its decline, she said.

Other analysts agreed that Fleet’s earnings would continue to be under pressure.

“We are going to see some weaknesses in the first quarter,” said Andy Collins, a senior analyst at ING Barings in New York. “They were relying on Robertson Stephens and equity for revenue growth.”

But Mr. Collins said Fleet can rebound from the lull in capital markets. “They have other lines of business,” he said, citing commercial finance, credit card, and retail banking units as areas that could help drive profits.

In announcing his “sell” rating Thursday, Mr. Mayo also pointed to future executive changes at the company as an area of uncertainty. In keeping with the Fleet-BankBoston Corp. merger agreement, president Charles Gifford is expected to succeed Terrence Murray as chief executive officer next year.

By the second half of the year Fleet’s purchase of Princeton, N.J.-based Summit Bancorp, which closed in late February, will be advanced to the integration phase, capital markets will rebound, and the provision levels will start coming down, Mr. Polini said. On Friday, Fleet said it would consolidate 12 branches in Connecticut as a result of the Summit acquisition.

Ms. Madan said the Summit deal would dampen near-term earnings by 2 cents a share. Fleet should get an improved outlook for credit quality this year, following the sale of $1 billion in troubled and nonperforming loans in the fourth quarter. Chargeoffs and loan-loss provisions should decline, she said.

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