bank shares caused by investor fears about consumer credit quality. After reaching a 1995 high of $73.62 on Oct. 16, the New York banking company's shares plummeted 14% in eight days. Since then they have regain about half that ground. Shares closed at $68.625, on Wednesday, up $1.375, as bank shares generally rallied. Some analysts on Wall Street believe a buying opportunity has opened in Citicorp, which had been one of the hottest stocks in this year's market. At the same time, others see warning signals. "The drop has spooked some investors, but it shouldn't," said James M. Rosenberg, an analyst for Lehman Brothers. A similar, but smaller, decline happened after strong earnings were announced three months ago, before the buildup of fears about deterioration in consumer credit standings, he said. Citicorp's fast-growing revenues from international operations should more than offset any problems in the consumer sector in this country, the analyst believes. "Even if Citicorp were to experience a 100-basis-point rise in U.S. consumer chargeoffs, earnings would be at risk by only 10%," Mr. Rosenberg said. In fact, he said he has already incorporated a "modest worsening" of consumer credit in his earnings estimates for both 1996 and 1997. Mr. Rosenberg is keeping his "buy" rating on Citicorp, which he has had in place since the stock sold for $18 in the summer of 1992. During the third quarter, the 26% gain in value in Citicorp made its shares the top performing stock recommended by Lehman Brothers, according to a survey by The Wall Street Journal. "Citicorp remains our top money-center bank recommendation with a two- year price target of $100," he said in a report. Mr. Rosenberg based that expectation on a 1997 earnings per share estimate of $8.25. He believes the stock will sell at 15 times earnings, or 80% of what other stocks in the Standard & Poor's 500 index sell for, the so-called "market multiple." Offering a considerably less rosy view is Lawrence W. Cohn of PaineWebber Inc. "As the largest credit card issuer in the country, we think it will be impossible for Citicorp to avoid concerns about credit cards' credit quality," Mr. Cohn said in a new evaluation of the bank stock sector. "In our opinion, investors should resist the temptation to step in on the pullback. This could be just the start of a significant bear market for these stocks," he said in a report headlined "It's not too late to sell." A rise in loan chargeoffs is coming, he said, "just as banks are running out of capacity to further reduce loan loss reserves," he cautioned. Further, he said that recoveries on commercial-loan losses from the last recession, mostly real estate, are coming to an end. "As consumer-loan losses accelerate, based on the strong volume growth already booked, and the commercial-loss recovery pipeline starts to empty out, forecasts of loan loss provisions are going to have to rise sharply and earnings estimates are going to have to come down," he said. "In our view, the market is just starting to confront this issue," Mr. Cohn said.

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