Wells Fargo & Co. shares tumbled Monday on news of a rare downgrading as an analyst questioned how mortgage profits can be sustained and whether systems integrations will hinder expansion.

On a day when the Standard & Poor's bank index fell 1.26%, Wells Fargo shares plunged 3.32%, or $1.50, to $43.6875.

George Bicher of Deutsche Bank Alex. Brown changed his rating on the stock to "buy" from "strong buy." Mr. Bicher said he was acting after discussions with several managers at Wells Fargo who have responsibility for various business units.

Mr. Bicher said he still considers the shares attractive for long-term investors "given the quality of management-which tends to be a scarce resource."

But the market has already given the shares a premium price in his opinion. That, in addition to certain business risks, makes it hard to keep recommending the stock strongly, he said.

He questioned Wells Fargo's ability to sustain profitability during the current decline in mortgage production.

First-quarter mortgage banking revenues were 8.2% of the company's total revenues and 7.8% of earnings.

When Wells Fargo reports second-quarter earnings, Mr. Bicher said, there may be evidence of pressure on revenues and earnings.

The decline may be tempered by Wells Fargo's ability to lower its amortization expenses in tandem with falling production revenues, he said.

Mr. Bicher also said systems integration "will be more complex" because the surviving operating platform is a combination of applications from both Wells and Norwest Corp. The two companies merged on Nov. 2 and adopted the Wells name.

"We do not expect integration problems," he said, but the risks probably limit some expansion over the short term. Mr. Bicher praised Wells' cross- selling efforts, which he traced back to Norwest.

"The sales culture at Norwest is a relatively scarce resource in this industry, but an increasingly critical resource as revenue stagnation from traditional products is not likely to abate," he said.

Management is coaching em-ployees and has also created a measurement system that supplies awards and recognition.

"This is a lot easier said than done," Mr. Bicher said. But he said it appears to be catching on in Well's California market.

Another analyst maintained that Wells Fargo is in good shape for the second quarter. "Fundamentally the operations are quite sound," said Lori Appelbaum of Goldman, Sachs & Co.

Though there may have been a decline in mortgage banking revenues for the second quarter, she said, they will not cause Wells to miss earnings targets that analysts have set.

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