Despite one of the most enviable franchises in banking and a well- regarded management team, Norwest Corp. has lagged behind other big regionals in this year's bank stock rally.

Analyst George Bicher at Alex. Brown & Sons Inc. says it's time for investors to wake up and discover the midwestern banking giant.

On Friday he upgraded his rating on it from "neutral" to "strong buy," predicting its stock price would appreciate 28% in the next 12 months to $34 a share. Norwest shares closed up tktk Friday at tktk.

"Like many of the indomitable banks out there - those that are not going to be taken over - Norwest's stock price has underperformed other banks," he said.

"But Norwest is different from other buyers," he said. "It is a disciplined acquirer and delivers consistent earnings."

Norwest shares have risen 20% this year. Alex. Brown's regional bank group, which includes much prime takeover bait, has jumped 32%.

Other banks seen as acquirers, like NationsBank Corp. and BankAmerica Corp., have also not benefited as much from this year's bank rally. Investors worry that these banks may end up paying too much for acquisitions.

But Norwest's growth in earnings per share will be 14% to 15% annually in the next two years, compared with a regional average of 8% to 10%, Mr. Bicher said.

Contributions from its finance and mortgage companies will drive earnings higher at Norwest than at its peers, he added.

Some analysts are neutral on the stock, noting that it is already trading at 2.1 times book value, against a regional average of 1.7 times book. Norwest's book value has been stagnant in the last 12 months, reflecting a series of acquisitions in which the bank paid cash.

But Mr. Bicher says book value is irrelevant, because it values a bank's liquidation value, which is not an appropriate measure for banks in good health.

"These old rules of thumb for plain-vanilla banks, like book value, don't hold much water with these new bank holding companies," he said.

Ben Crabtree, an analyst with Dain Bosworth in Minneapolis, said investors are so focused on mergers and acquisitions that they may be slow to recognize Norwest's value.

"It may take a tougher economy and a tougher stock market for Norwest to establish a premium valuation," he said.

"In 1995 the action has been among the buyout candidates," he added. "We talked to a number of institutional investors whose interest are limited only to that. They don't like banking particularly as a business, but they like buyouts."

Mr. Crabtree nonetheless has a "buy" on the bank. Norwest's great attribute, he said, is the predictability of its sound earnings.

Also, though investors are concerned about acquirers paying pricey premiums, he said, Norwest has a history of disciplined acquisitions. A case in point, Mr. Crabtree said, is the recently announced deal to buy Amfed Financial in Nevada.

However, he added, since Norwest is considered eager to expand into Utah, Nevada, and more midwestern states, it may be tough to persuade investors to distinguish it from other acquirers.

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