Wells Fargo & Co. shares were downgraded Monday to "accumulate" from "buy" by analyst Joel Silverstein of Deutsche Morgan Grenfell.

Mr. Silverstein said the shares, which lost 0.375, to close at $304.375, had hit his price target. But he added that Wells could still outperform the market over the long term.

Mr. Silverstein joins a chorus of analysts who are recommending that investors sell or hold their shares of the market's most expensive bank stock.

Last week, as shares of the San Francisco-based bank crossed the $300 threshold, Diane Merdian of Montgomery Securities also lowered her rating to "hold" from "buy" based on price.

"I still really like Wells in the long term. I think they're fairly valued, but expectations for tangible earnings estimates are a bit high for the company," she said. "If you ask me what names to own for three or four years, I still like (Wells)."

Ms. Merdian's price target for Wells is $292 for 1997 and $360 for 1998. The analyst also recommends Chase Manhattan Corp., BankAmerica Corp., and First Bank Systems.

"This year isn't going to be an easy year, but Wells will be on my 'buy' list again," she predicted.

Wells skeptics worry about revenue growth this year.

Still, a large part of the investment community firmly believes that cost savings from Wells' supermarket banking initiatives, an improving local economy, and the integration of First Interstate will produce positive revenue growth.

Merrill Lynch analyst Sandra Flannigan, who has an "accumulate" rating on the stock, said, "Investors should be somewhat price sensitive when establishing a position in the stock."

Ms. Flannigan's price target is between $325 and $330.

"Revenue growth is the question mark," she said. "Management has reaffirmed its commitment to cost cutting, and made it clear that they are going to use excess capital to aggressively buy back shares-possibly 1.5 million shares each quarter.

"If they can get this engine revved up and get the attention more outward than inward, there should be an opportunity for pickup in revenue growth," she said, referring to the prospect that Wells will start adding loans now that it has integrated First Interstate.

"Though certainly last year turned out to be disappointing," Ms. Flannigan said, "this company is still building an organization that we think will increasingly have an edge in financial services: cost advantages, delivery, and marketing advantages.

"I think that's what many investors are doing-looking beyond the earnings valley and giving management credit to deliver," Ms. Flannigan said.

Cost cutting and supermarket banking have prompted analyst Lawrence Vitale of Bear, Stearns & Co. to list Wells as his top stock pick. Mr. Vitale has a $360 price target and estimates that the stock will earn $26.50 this year, and $33 in 1998 on a cash basis.

"They weren't in the selling mode last year, but now, with the integration complete and the California economy picking up, they'll be sending people back out into the field," he said.

Separately, analyst Fred Cummings of McDonald & Co. cut his rating of Fifth Third Bancorp to "hold" from "buy," saying that the Cincinnati bank had gained 23% in the last month and reached his $82 target price.

"Fifth Third is at the high end of its historical valuation range, and it would be prudent for investors to stop buying the shares now," Mr. Cummings said. "In the longer term, it is one of our core holdings, but right now, at 20-times earnings and a 55% premium to our group, we're recommending that investors hold their positions."

In trading Monday, Fifth Third shares lost 50 cents, to close at $76.875.

Meanwhile, the S&P Bank index fell short of the 500 threshold, gaining 4.30 points, to 494.83.

"The fundamentals are solid for the bank group," Mr. Cummings said. Banks "are focused more sharply on profitability, not growth, buying back shares, and maximizing return on equity."

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