Banks and other stocks rose and fell sharply on Friday in a session marked by some of the most volatile trading this year.
Amid the market turmoil, shares of Chase Manhattan Corp. were elevated by Donaldson, Lufkin & Jenrette Inc. to the firm's "recommended list" as a compelling buy.
The New York banking company's stock has considerable upside potential, Donaldson banking analyst Thomas K. Brown said in a new report. He has a 12-month target price of $160.
"Despite recent performance, Chase Manhattan continues to trade at a significant discount to its peers," said Mr. Brown. "We believe that the market is beginning to make a distinction between the relative valuation of banks based on earnings performance, franchise strength, and management quality."
Chase's shares rose $1, to $123.625, on a day when some banks regained ground lost in last Thursday's steep slide brought on by a rout in Asian and European markets. Other bank stocks fell further.
The Standard & Poor's bank index fell 0.28%, while the Dow Jones industrial average slipped 1.69%. The S&P 500 retreated 0.95%, and the Nasdaq Bank index surrendered 0.18%.
Mr. Brown dismissed the nearly 1.5% decline in Chase's stock on Thursday as not relevant to the company's overall picture.
Chase has enjoyed strong earnings growth fueled by revenues from corporate finance, trading, and fees from syndication and investment management and trust fees, noted Mr. Brown.
Diminished credit quality concerns also are working in Chase's favor.
The company, however, will thrive most notably from the turnaround talents of Marc J. Shapiro, who took the chief financial officer position just three months ago.
In other news, banking analyst George M. Salem of Gerard Klauer Mattison cautioned investors Friday morning that Citicorp remains vulnerable to the tumult in the Asian markets.
After a pounding on Thursday, Citicorp's shares struggled to retake some territory. Friday the stock fell 25 cents, to $136.625.
However, Mr. Salem, reiterating his "hold" rating, said "Citicorp has only just begun to reflect its Asian vulnerability."
The money-center has roughly $60 billion in consumer and corporate loans in Asian nations, he said. Other, non-U.S. banking companies with similar exposures have seen their stock plunge by as much as 30%.
Mr. Salem said that he is reviewing Citicorp's earnings estimates.
"Following the third-quarter earnings report, the new Citicorp restructuring and the worsening Asian currency and economic climate, we expect investors will reassess their estimates," wrote Mr. Salem.
"We strongly believe the recently announced Citicorp restructuring charge was influenced by management's bearishness about the Asian situation-as well as fierce competition pressures elsewhere in the world."