Fleet Financial Group Inc., whose acquisitions have been greeted with skepticism on Wall Street, won a major convert Tuesday when its shares were upgraded by Smith Barney.

Fleet shares gained $1.25 to close at $51.25 on news of the rating change by Smith Barney's Henry C. Dickson, who added his voice to a chorus of banking analysts arguing that megamergers in the industry are beginning to pay off for investors.

Acquirers' stock often suffers as analysts and investors focus on the dilutive impact of deals on earnings per share. But analysts and investors have recently overcome skepticism about buyouts by NationsBank Corp., First Union Corp., and PNC Bank Corp., among others, fueling a strong rally in the bank sector that continued on Tuesday.

Few acquisitive banks have lagged behind the group as much as Fleet, however. In recent years, the Boston-based bank has swallowed up Norstar Bancorp., Shawmut National Corp., and National Westminster Bank USA. While the Standard & Poor's bank index gained 31% this year, skepticism about those deals held Fleet shares' gain to a mere 22.7%.

In upgrading Fleet shares to "outperform" from "neutral," Mr. Dickson declared that the company "is going to have more focus" as it completes absorbing Shawmut this year.

And he said the $87.5 billion-asset bank will bolster its earnings still further next year as it consolidates Natwest into its network.

Fleet is "closer than expected to completing the consolidation and systems integration from all its acquisitions" and that has given Smith Barney "a greater level of comfort that Fleet will deliver more consistent operating results," Mr. Dickson said.

Mr. Dickson raised his 12-month target price on Fleet shares to $57, from $50. He maintained earnings per share estimates of $4 this year and $4.90 in 1997.

Elizabeth Summers of Ryan, Beck & Co. said she was "skeptical" when Fleet, First Union Corp., and PNC Corp. announced mergers last winter, so she slapped hold ratings on all three.

But Ms. Summers has since restored "buy" ratings on the banks "because the mergers have gone so smoothly and added to the companies' earnings.

"The mergers aren't an issue at this point for me," she said, adding that she expects the three banks to outperform the stock market in the months ahead.

Shares of NationsBank plummeted more than 12%, to $82, in September, after the bank announced its costly acquisition of Boatmen's Bancshares But Lehman Brothers analyst Michael Mayo notes they have regained their momentum and now trade above where they were before the announcement.

When the merger is completed, NationsBank will have the No. 1 market share in the South, Mr. Mayo observed. "That's worth something, but it doesn't show up in the next year's earnings statement," he said. "But many investors I talk to are starting to look at five-year horizons, not just six months."

George Salem, an analyst at Gerard Klauer Mattison & Co., also has been sounding the bigger-is-better theme.

"We believe investors do not fully appreciate the degree to which the newly increased size better enables banks to increase revenues and reduce expenses," Mr. Salem said in a favorable report on NationsBank's deal.

One reason he believes NationsBank's controversial acquisition will be good for stockholders, he said, is that Boatmen's was a "poorly marketed bank." By adding NationsBank expertise to these new branches, the new bank may well expand its customer base.

In trading Tuesday, NationsBank shares rose $1.625, to $95.125. The Standard & Poor's bank index increased 1.83%, outperforming the S&P 500, which closed up 1.05%. The Nasdaq bank index, which covers mostly small banks, closed up 0.42%.

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