Wells Fargo & Co. lost one of its best friends on Wall Street Monday when Donaldson, Lufkin & Jenrette analyst Thomas K. Brown dramatically lowered his expectations for Wells' stock and questioned the company's capacity to "deliver in the future."

The influential analyst, one of Wells' biggest boosters for many years, cut his 12-month target price to $419 from $465, a 10% drop, and said the bank is unlikely to trade at the same earnings multiples as other big banks. He continues to rate the stock a "buy," but largely because he now sees the company as an attractive acquisition for banks that want to expand in the West.

Wells shares fell $8.4375, to $316.1875, on the news. Trading volume was more than double the average, including several large trades, indicating that some major investors were selling the stock.

Mr. Brown's turnabout occurred after bank management gave what he called a "terribly disappointing" presentation to Donaldson Lufkin investors last Friday in San Francisco.

"Management showed a surprising lack of vision about the future and, most disturbing given the company's disappointing earnings over the last seven quarters, management was arrogant," Mr. Brown wrote in a caustic report. "For the first time we have concerns about Wells Fargo's ability to deliver in the future."

Trading of the bank's shares was delayed in the morning as specialists at the New York Stock Exchange struggled to match buy and sell orders. Wells stock finally opened trading down $13.625.

Wells officials did not return phone calls about Mr. Brown's analysis. They told Dow Jones they were "perplexed" by the report.

Mr. Brown's action leaves Wells with few analysts willing to tout its stock. Nine analysts rate Wells stock "neutral" or "sell," and six besides Mr. Brown rate it "buy" or "outperform." The fall from favor on Wall Street is reminiscent of CoreStates Financial Corp.'s diminishing reputation before it agreed to sell to First Union Corp.

Mr. Brown's strong words are just the latest blow to the venerable San Francisco institution, which in 1996 he called "not only the best-managed banking company, but one of America's greatest companies."

But Wells' stock has trailed the market ever since Wells won its hostile bid for First Interstate Bancorp, a bid Mr. Brown vociferously supported. Since the First Interstate merger closed in April 1996, Wells Fargo stock has risen 23%, while the Standard & Poor's bank index has risen 81%.

Mr. Brown remained at Wells' side last summer when the bank warned that quarterly earnings would fall drastically short of expectations. He argued that the bank's strategy of focusing on opening banks in supermarkets and developing other alternative delivery systems for banking services would eventually pay off.

He even came to the bank's defense last month when he said there was evidence to suggest that Warren Buffett, Wells' top investor, had increased his holdings in the bank. Wells stock was momentarily pounded last summer on rumors that Mr. Buffett was liquidating his stake.

As recently as December Mr. Brown told American Banker that Wells Fargo's First Interstate problems "are history."

Now, he is suggesting that Wells Fargo could be taken over.

He guarded this sentiment by saying in his report that Wells could have difficulty maintaining its price/earnings ratio in line with such peers as U.S. Bancorp, Bank of New York Co., Norwest Corp., Wachovia Corp., or SunTrust Banks Inc.

Through all the recent difficulties, Wells executives have withstood pressure to sell. Not only does the bank have a huge market value of $27 billion, but few rivals have shares that trade at multiples similar to Wells. In Wall Street parlance, that means most other banks lack the currency to make an offer.

But if Wells' stock were to lose its lofty price-to-earnings ratio, then a takeover would become more feasible. "I asked them if they're worried about their p/e," Mr. Brown said in a telephone interview. "They said they're not."

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