Analyst Nancy Bush of Brown Brothers, Harriman & Co. has removed her "trading buy" recommendation from the stock of NationsBank Corp.

Though the bank remains attractive on a valuation basis, Ms. Bush said the superregional company had reached her price target and also "tends to get whacked when worries about the bank stocks start to surface."

She thinks that could happen during the second half of this year, which "may prove to be an unusually challenging environment for the banking stocks, with quite a bit of volatility for some issues."

Indeed, Ms. Bush said she is reviewing all the bank stocks she follows in light of the level of uncertainty now about the pace of economic activity and direction of interest rates during the rest of the year.

During Wednesday's rally, shares of NationsBank, whose headquarters are in Charlotte, N.C., were up $1.25 to $56.625. Ms. Bush had set the mid-50s as a target price when she initiated her "trading buy" rating last fall.

So far this year the stock is up 23%, but the analyst noted that it remains "cheap relative to the group." It sells at 8.1 times her 1995 earnings estimate of $6.85 a share and 7.2 times her forecast of $7.65 or next year.

By contrast, shares of other southeastern regional banks sell on average at 9.5 times this year's earnings and 8.7 times next year's expectations.

Ms. Bush likes the corporate culture and business prospects at NationsBank. But that is also the source of her concerns.

"This company has been one of the most aggressive in the industry in the past few years in terms of growth and entry into new areas of business," she pointed out.

But while this assertiveness and expansion have made it an industry leader, she said, "we think this dynamism may be a factor of some confusion as investors search for safe havens as recession rumors become louder."

Specifically, she cited its perceived status as a "hybrid regional" banking company with some money-center bank characteristics, and its identification with loan syndications and large corporate lending.

Despite the rating shift, Ms. Bush did not change her earnings estimates for NationsBank. She now rates the stock as "neutral" and will "watch for further opportunities."

Another analyst, John Mason of Interstate/Johnson Lane, had a more optimistic view. "I am not assuming that the syndicated lending business is going to go down the drain," which would lead to "suffering" for companies like NationsBank and Chemical Banking Corp., he said.

Loan demand in NationsBank's home region and its other major region, the Southwest, is "as strong if not stronger" than it has been, he said. "So I'm basically not nervous."

Mr. Mason has a "buy" recommendation on the stock.

***

Bank stocks enjoyed another strong outing on Wednesday market as stocks overall advanced.

J.P. Morgan & Co., New York, the only bank represented in the Dow Jones industrial average, was up $1.625 to $70.875.

Among the strongest bank performers of the session was Wachovia Corp., Winston-Salem, N.C., up $1.325 to $37.875.

Meanwhile, First Fidelity Bancorp., Lawrenceville, N.J., was up $2.50 to $53.125, Republic New York Corp. was ahead $1 to $51.25, and Chicago's Northern Trust Corp. was up $1.25 to $38.75.

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