Shares of Chase Manhattan Corp. could hit a price of $150 within 18 months, analyst Henry C. "Chip" Dickson of Salomon Smith Barney Inc. said in a report.
The New York banking company's stock ended trading on Wednesday at $114.4375, up 18.75 cents, after Mr. Dickson made his projection and reiterated a "buy" recommendation based on his strong outlook for the company.
Only a day earlier, Ronald I. Mandle, banking analyst at Sanford C. Bernstein & Co., reiterated his "outperform" ranking for Chase Manhattan.
Enhanced trading revenues and risk management efforts will fuel gains at Chase, Mr. Dickson said. "In the current environment, Chase seems well- positioned to sustain its 10-year compound growth rate" of about 11.5% in trading revenue, he said.
Chase has also written down several of its overseas positions, Mr. Dickson said, "so in the event of another downturn the company's exposure would be considerably less."
Chase also anticipates growth in its credit card portfolio from the integration of Bank of New York's business and seems to be carefully handling retail and commercial loan growth, Mr. Dickson said.
He made the assessment after meeting with Chase's chief credit officer, Robert S. Strong, and Donald H. Layton, the bank's chief of global markets. The outlook assumes higher credit costs from growth in the card portfolio, a very low level of commercial loan chargeoffs, and a modest increase in Asian nonperforming assets.
Elsewhere, as expected, the Federal Reserve's Open Market Committee opted to keep the federal funds target rate at 5.5%.
The potential impact of the still-unfolding Asian financial crisis was probably the major reason.
The market's response was mixed. The Standard & Poor's bank index dropped 0.30% and the Dow Jones industrial average 0.38% after overseas markets fell.
The Nasdaq bank index gained 0.03% and the S&P 500 0.09%.
"There's a lot of uncertainty" in the investment community, said Marc Lackritz, president of the Securities Industry Association, whose members include institutional and retail brokerages, mutual fund companies, and other big investors.
"General optimism" exists about the economy and inflation levels, Mr. Lackritz said. There is also a trend away from placing deposits in banks to putting money into securities like mutual funds, he said.
Mr. Lackritz said Wall Street is unsure what impact the Asian economic crisis will have. "It's too soon to tell," he said.
Community banks, though lacking direct overseas exposure, have experienced their own share of market uncertainty. Shares of BankUnited Financial fell 68.75 cents, to $12.25, and First Palm Beach Bancorp lost 25 cents, to $37.75, after downgrades to "neutral" from "buy" by Richard X. Bove of Raymond James & Associates.
Continued low interest rates "will place excruciating pressure" on the companies as borrowers refinance mortgage loans and investments in mortgage securities fail to deliver, Mr. Bove said.
"You don't want to be invested in community banks during the mortgage refinancing boom, because they'll get refinanced out of their profits," he said.