Ryan, Beck & Co. upgraded the Long Island thrift T.R. Financial to "buy" from "hold," saying recent price declines have led to a buying opportunity.
Analyst John M. Kline said share price "jumped up" and remained fairly strong after the thrift released higher-than-expected earnings in April. On Friday, however, the stock began to look "attractive" when it fell 56 cents to $26.125, on volume that was slightly heavier than usual, he said.
The share price slipped further Monday, along with those of other financial institutions hurt by Friday's employment report, which indicated a robust economy, raising the possibility of higher interest rates.
T.R. Financial shares closed at $26, down 12.5 cents on a day that the S&P bank index fell 0.53%.
Mr. Kline said T.R. Financial, which owns Roosevelt Savings Bank, has one of the strongest growth rates among the Long Island thrifts. He also noted the company has been shifting away from lower-yielding securities to higher-yielding loans.
"If you compare them to the other companies of similar size, they stack up favorably," he said.
T.R. Financial benefits from obtaining its deposit insurance through the Bank Insurance Fund, which now charges no premium. If T.R. were insured through the Savings Association Insurance fund, its earnings would be reduced by 23 basis points.
The thrift also has a strong buyback program in place, said Mr. Kline. The company is authorized to repurchase 895,000 of its shares. He expects it to buy up to 750,000 in the next three quarters.
Separately, A.G. Edwards & Sons and Lehman Brothers Inc. both initiated coverage of Norwest Corp.
Analyst James Weber of A.G. Edwards initiated coverage with an "accumulate" rating, predicting a 12% to 14% rate of earnings growth through 1988.
Michael L. Mayo of Lehman Brothers, on the other hand, initiated coverage with a "buy" rating, saying the market is overdue to reward Norwest for its "superior track record, superior businesses, and superior earnings as compared to the typical banks," he said.
Mr. Mayo said that he is confident that losses in the consumer finance subsidiary "may peak around midyear, so that should eliminate the dark cloud that has been hovering over the stock."
Norwest shares fell 50 cents to $34.75.
In other news, Keefe Bruyette & Woods downgraded State Street Boston Corp. from "attractive" to "hold," citing its high share price. The Boston bank's shares rose 12.5 cents to $52.50.
First Commerce Corp., New Orleans, in trading yesterday had five times the normal volume. Analyst Anthony Lombardi at Dean Witter Reynolds attributed the volume to the company's buyback program, which is being used to fund the the company's convertible preferred stock.
First Commerce shares rose 12.5 cents to $35.625.