BofA update shows where active managers are putting money
Tuesday, Stephens analysts lowered the price target on Zions Bancorp (NASDAQ:ZION) to $52 from $54, while maintaining an Equal Weight rating on the stock. Currently trading at $43.62 with a P/E ratio of 8.81x, InvestingPro analysis suggests the stock is slightly undervalued. The revision follows Zions Bancorp’s recent quarterly financial performance, where operating earnings per share (EPS) surpassed consensus estimates, but pre-provision net revenue (PPNR) fell short by approximately 2.5% due to lower fees and higher operating expenses.
Classified and criticized loans showed signs of stabilization after a rise in 2024, and net charge-offs (NCOs) remained low at 11 basis points (bps) in the first quarter of 2025. Zions Bancorp’s success in lowering total deposit costs, which decreased by 17 bps quarter over quarter, contributed to the expansion of the net interest margin (NIM). The bank maintains a strong dividend track record, having maintained payments for 55 consecutive years with a current yield of 3.94%.
Late in the quarter, Zions Bancorp completed a branch acquisition in California, which added $630 million in deposits and $420 million in loans, predominantly in the 1-4 family residential category. Management provided preliminary insights on the outlook for the first quarter of 2025 and expressed confidence in achieving 100-200 bps of positive operating leverage in the first quarter of 2026 on a year-over-year basis. InvestingPro data shows the bank maintains a GOOD financial health score, with particularly strong marks in relative value metrics.
Despite the positive aspects, the softness in first-quarter 2025 PPNR and the outlook for the first quarter of 2026 could lead to some near-term underperformance for Zions Bancorp shares, with the stock already down about 19% year-to-date. The report concluded with an expanded discussion on net interest income, credit quality, capital trends, and the company’s outlook, while reiterating the Equal Weight rating and adjusting the price target to $52. For deeper insights into Zions Bancorp’s valuation and financial health, access the comprehensive Pro Research Report available on InvestingPro.
In other recent news, Zions Bancorp reported first-quarter 2025 earnings that missed analyst estimates. The bank posted net earnings of $169 million, or $1.13 per diluted share, falling short of the expected $1.19 per share. Despite this miss, the earnings represent an 18% increase from the same quarter last year. The results were influenced by an $0.11 per share charge due to a Utah tax law change, which the company expects to recover over time. Additionally, Zions Bancorp completed the acquisition of four branches in California’s Coachella Valley, adding $630 million in deposits and $420 million in loans. Credit quality remained stable with nonperforming assets at 0.51% of loans and leases. In a related development, DA Davidson revised its price target for Zions Bancorp from $62.00 to $57.00 while maintaining a Buy rating. The firm cited a cautious financial outlook due to softer loan demand and reduced capital markets activity but expressed confidence in the bank’s strategic measures.
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