Tuesday August 18, 10:09 am Eastern Time
RESEARCH ALERT-Hanley starts SouthTrust as buy
NEW YORK, Aug 18 (Reuters) - Warburg Dillon Read's top banking analyst, Thomas Hanley, started
coverage of SouthTrust Corp (SOTR - news) on Tuesday with a buy rating, saying the company has a
strong franchise in the U.S. Southeast and is ''a tempting acquisition target.
-- He gave the stock a 12-month price target of $46.
-- Shares were up 3/8 to 37-1/2 in early trading.
-- In a research report from the firm, he said SouthTrust has moved far beyond its Alabama roots with an ambitious acquisition
campaign that has landed the bank in seven states in prosperous metropolitan markets in the Southeast.
-- Hanley, one of Wall Street's best-known banking analysts, said that ''superregional'' banks, such as NationsBank Corp. (NB -
news) and First Union Corp. (FTU - news), might covet SouthTrust's extensive Southeastern franchise.
-- ''In a takeout scenario, we estimate SouthTrust could command $61 a share, a potential 64 percent premium above current
price levels,'' he said in the report.
-- He also cited SouthTrusts's consistent track record, saying the regional bank has kept up ''superb'' credit quality even during
periods of rapid asset growth.
-- Forecast continued earnings per share growth in the 11 to 13 percent range over 1998 - 2000.
-- He set a core EPS estimate for 1998 at $2.25, rising to $2.55 in 1999.
-- SouthTrust has a $6.1 billion market cap with 164.7 million shares outstanding, the report said. |
