The stock, down from 40 in May a year ago to 26 on Apr. 23 this year, should hit 35 in 18 months, he predicts. In a flat market, earnings could rise to $1.65 a share in 2003 and to $1.92 in 2004 if the market rises 2% to 4%. Jeffrey Hopson of A.G. Edwards, who rates the stock an aggressive buy, says that, despite a tough environment, Mellon picked up considerable new business in asset servicing. The stock is "attractively valued" at 14.9 times his 2003 earnings estimate. Asset-management firms will trade consistently at 15 to 20 times earnings, he adds, "once the market psychology improves."
Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them. By Gene G. Marcial