Bank stocks followed the market last week, rising slightly on good economic news.
The Federal Reserve's opinion that the U.S. economy grew at a "modest pace" in March and April fueled a modest rise in the Dow Jones industrial average, in a week of volatile trading.
Amid the upturn, Bear, Stearns & Co., New York, Robinson-Humphrey Co., Atlanta, and Alex. Brown & Sons, New York, initiated coverage of Sterling Commerce Inc., Dallas
Bear Stearns analyst Robert Horton gave Sterling a "favorable" rating. He estimated the company would earn 75 cents per share for fiscal 1996, which ends in September, and 99 cents in fiscal 1997.
Mr. Horton said the company has strong potential in its core businesses of electronic commerce and electronic data interchange. Sterling made an initial public offering in March. Sterling Software Inc., Dallas, owns 81.4% of Sterling Commerce.
Dawn Wheeler, vice president of investor relations at Sterling Commerce, said the positive rating was driven by the popularity of several new commercial banking software products and by the success of the company's stock offering.
Sterling Software's plans to eventually spin off Sterling Commerce also apparently influenced analysts' opinions. "We are looking to spin off Sterling Commerce from Sterling Software," said Ms. Wheeler. The timing of the spinoff depends on the Internal Revenue Service's ruling on Sterling's tax redistribution plan.
In other news, Merrill Lynch & Co. lowered its intermediate-term rating of Bisys Group Inc. from "buy" to "hold." Merrill held firm on its long- term "buy" rating, however.
Michael Weingarten, analyst at San Francisco-based Montgomery Securities, said Bisys emerged in good shape from an important quarter.
Because of acquisitions, the quarter "represented one of their biggest challenges," he said. "The company hit its numbers. I like the company."
The National Association of Securities Dealers on Friday continued to halt trading of the shares of Comparator Systems Corp., a Newport Beach, Calif., firm that develops and sells biometric identification systems for credit cards, drivers' licenses, and automated teller machines.
Last Tuesday, 177 million shares of Comparator stock changed hands, setting a one-day Nasdaq record. The heavy trading took place as reports circulated about a new product that was to be announced this week.
Company officials declined to comment on the trading activity amid the investigation.
Elsewhere, Checkfree Corp. said it has closed its acquisition of Security APL Inc. in a stock deal valued at $53.6 million.
Security APL, Chicago, provides software and services to the banking industry. Its products include the Pawws Financial Network, a service that provides for stock and mutual fund trades over the Internet.
Transaction Network Services Inc., a Reston, Va.-based provider of electronic commerce transaction services, has agreed to sell and license its network products to SNS Shared Network Services Inc. Shared Network operates its business in Canada under the name Transact Data Services.