First Union Corp. earned a rare vote of confidence Thursday, when an influential analyst gave his highest rating to the beleaguered stock.

Thomas H. Hanley of Warburg Dillon Read designated First Union a "strong buy," becoming the only analyst among the 33 who cover it to heartily recommend the stock.

It has been much more common in recent weeks to see "sell" and "hold" recommendations slapped on First Union, as analysts react to the second of two announcements by the company that it will fall shy of earnings targets this year.

Indeed, few bank stocks rate "strong buy" recommendations in today's market, as analysts hedge their bets on the sector with lukewarm "buy" and "accumulate" ratings.

First Union shares rose 3.65%, to $44.3125, as the investment community got word of Mr. Hanley's action. Shares had been down 31% since the beginning of the year.

Mr. Hanley is known for compiling lists of likely takeover targets, and his comments often boost stocks. But his read on First Union is that its business, not necessarily its value as a merger target, warrants a higher stock price.

Mr. Hanley said he acted after discussing the recent earnings difficulties with First Union's chief executive officer, Edward Crutchfield. "We came away impressed with his grasp of the situation and believe strongly that (the company's) current earnings estimates are on very solid ground" Mr. Hanley said in a note to clients.

"Management," Mr. Hanley said, "has gone through its 1999 budget with a fine-toothed comb and we believe that anything that could go wrong is now factored into estimates."

Mr. Hanley raised his projection of earnings for 2000 to $3.75 per share, from $3.70, reflecting confidence that First Union can achieve at least 10% earnings growth.

"The fundamentals of the company are looking solid, with loan growth, fee income, and credit quality all performing in line or better than the company's outlined budget," he said.

"We have always liked the underlying franchise at First Union, given its strong technology platform and diverse business mix," Mr. Hanley said.

He estimates First Union's expenses will grow more than 6% while revenues grow 8%, and that the provision for loan losses will grow 21%.

Still, First Union continues to have many critics on Wall Street.

"From a risk-reward standpoint" the shares are not appealing, said Bradley Ball, who follows the company for Credit Suisse First Boston.

First Union appears "to be doing well fundamentally," Mr. Ball said, but below the surface, "there seems to be a breakdown. There is a real sense of absence of real control."

Sean Ryan of Bear, Stearns & Co. has said he thinks First Union's shareholders would be best served if the company sells itself, possibly to Chase Manhattan Corp.

"First Union has sealed its fate," Mr. Ryan said. "Within two years it will be acquired. There has been a long string of fundamental disappointments."

Mr. Ryan differed from Mr. Hanley on First Union's technology platform.

The bank has "some of the best technology and it doesn't do much good," Mr. Ryan said. He argued that First Union's use of technology is tentative, as if it is trying out new products. "They're functioning as a beta test for the rest of the industry," he said.

Mr. Ryan also took issue with how the company has approached expansion.

"They have been among the most aggressive, but all too often they've made dilutive deals," he said. "There's a bent toward empire- building at the cost of shareholders."

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