Shares of Chase Manhattan Corp. have plunged 21% since Sept. 8 - which was less than one week before it unveiled plans to buy J.P. Morgan & Co. - but analyst Ruchi Madan sees an upside.

Ms. Madan, who started coverage for 14 banks Thursday at her new employer, Salomon Smith Barney, said Chase shares look attractive because the acquisition of the storied Wall Street institution will almost certainly lift profits in the long run. But it won't be an easy ride. Ms. Madan said she expects Chase to report lower than consensus earnings for the third quarter because of continued weakness in profits from private equity investments. Ms. Madan said she thinks current consensus estimates of 96 cents a share are too high, because many analysts have not factored lower venture capital gains into their models.

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