With bank share prices higher than they've ever been, some analysts are getting a touch of vertigo.
"Can't people put money into some other group for a while?" asked Brown Brothers Harriman analyst Nancy A. Bush, in a report downgrading Barnett Banks' shares short-term rating from "buy" to "hold" once it hit her $46 price target.
Ms. Bush remains positive about Barnett and banks in general, and said it is not necessarily time to bail out of bank stocks.
"The group is clearly continuing to benefit from its valuation differential to the market, attractive dividend yields, (and) visible earnings momentum," she said. "So it's a bit dangerous to set any kind of upside parameter on a bank stock. The sky's the limit, so to speak."
By downgrading Barnett, she joined a growing list of analysts who are wary that bank stocks will inevitably tire from their tremendous ride in the bull market.
Analyst Charles Wittmann of Wheat First Butcher Singer, Richmond, Va., said he's concerned that bank price to earnings ratios are getting near their historical highs.
Of the 34 bank stocks the Wheat group follows, its analysts recommend buying shares in only three. They rated 12 banks "outperform" and the rest "hold."
Paul Baran, chief investment officer of Richmond-based Central Fidelity Banks, said that although a correction may be likely, he's not especially worried about it.
"We could easily get a correction whether over or undervalued," he said, but "I don't see any of the indicators pointing to the start of a bear market."
He argued that investors must be prepared to take advantage of downturns as buying opportunities in bank stocks.
Ms. Bush of Brown Brothers added that "glimmers of differentiation" in the way the market views individual banks are emerging and should benefit banks like Barnett.
Ms. Bush said that although Barnett has soared past the price target and now trades at a lofty 79% relative valuation to the rest of the market, its revenue-producing capabilities and favorable geography could justify investment at the high price. In trading Tuesday, shares fell 37.5 cents, to $49.75.