Lehman Brothers analyst Mark T. Lynch downgraded SunTrust Banks Inc. and Boatmen's Bancshares on Tuesday, saying both had exceeded his price targets.

SunTrust slipped 25 cents to $49.26 and Boatmen's fell $1 to $33.50, after Mr. Lynch downgraded them to "neutral" from "outperform.

Mr. Lynch noted both regional banks were up about 10% in May and both were trading at higher price-to-earnings ratios than their peers.

To exect Boatmen's to continue to outperform its peers was to "go against history," Mr. Lynch said. The St. Louis-based bank usually lags behind the group, he said.

The stock peaked at $35 in intraday trading May 20, up from a trading low of $31 at the begining of the month. It has been as low as $26.75 earlier in the year.

Mr. Lynch said Boatmen's has a strong trust business and benefits from doing business in a region where the competition is "not really strong."

Lately, the stock has benefited from speculation that Boatmen's will be acquired once interstate banking is approved.

Mr. Lynch argued, however, that a merger is not imminent, even if long-range prospects are good that Boatmen's will be acquired by the likes of Banc One Corp. or Nationsbank Corp.

As for SunTrust, Mr. Lynch said the bank is trading at about 10 times his 1995 earnings projection of $4.90 a share -- the highest price-to-earnings ratio in its group.

SunTrust also has been on a roll. It's shares peaked at $50.50 in intraday trading April 19, after having traded as low as $43.50 this year.

Mr. Lynch was not the first to express caution about SunTrust.

"I downgraded them [to accumulate] about $3 ago," said Peter W. Tuz of Morgan Keegan & Co. Inc.. Mr. Tuz said SunTrust's earnings per share reflect the affects of an aggressive stock repurchase program. Because the number of shares outstanding is being reduced, the program "masks slower business growth," he said.

Carole Berger, banking analyst at Salomon Brothers, also has a hold rating on SunTrust.

She estimates the stock has potential to increase another 15%. That's not bad, but there are better opportunities around, she said.

Her buy list consists of a number of stocks with 25% to 30% upside potential -- including Boatmen's.

Ms. Berger said there are compelling arguments that interstate banking will lead to an acquisition of Boatmen's. "Missouri is a state that changes the most under national interstate banking," she said.

There are few anks to be acquired in the state, she said. Missouri law currently allows mergers only in contiguous states, she said, so the universe of potential acquires will increase markedly when interstate banking is approved.

Boatmen's stock is trading at a premium to some superregionals, yet it costs less than the stock of regional banks that are perceived as a takeover candidates, she said.

Ms. Berger said her valuation models suggest a price target for Boatmen's of up to $45 in 12 months.

"Here's a bank that's going to earn over 16% on equity, that's well capatilized and well reserved and has good earnings growth."

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