On Wednesday, Stephens analyst increased the price target for Zions Bancorp (NASDAQ:ZION) shares to $64 from $62, while maintaining an Equal Weight rating on the stock. Currently trading at $59.03, Zions has seen a strong 41% return over the past year. The adjustment follows Zions Bancorp's recent earnings, which surpassed consensus expectations, aligning with InvestingPro data showing 6 analysts revising their earnings estimates upward.
Zions Bancorp's operating pre-provision net revenue (PPNR) for the last quarter exceeded analyst predictions by approximately $23 million, or around 8%, driven by improved net interest income and fees. The company's earnings per share (EPS) on an operating basis also edged past consensus by $0.01, reflecting higher credit costs and a reduced tax rate of 19.9% in the fourth quarter of 2024. With a P/E ratio of 13.39 and market capitalization of $8.72 billion, Zions has maintained dividend payments for an impressive 54 consecutive years, demonstrating strong financial stability.
The analyst noted Zions Bancorp's progress in expanding its capital markets operations, which has contributed to consistent growth in customer fee income. While there was an increase in nonperforming commercial loans (NCOs) due to one commercial and industrial (C&I) relationship and a rise in classified commercial real estate (CRE) loans, which now represent 4.8% of total loans, updated appraisal data suggests potential losses should be limited.
Incorporating management's initial projections for 2025 into their estimates, Stephens expects a 2.5% loan growth for Zions Bancorp in 2025, with a forecast for the fourth quarter 2025 net interest income (NII) to be approximately 8% higher than the same quarter of the previous year.
During the earnings call, Zions Bancorp's management indicated that bank mergers and acquisitions are not a primary focus at this time. McEvoy's report includes detailed data on the bank's fourth-quarter performance and emphasizes the decision to maintain the current stock rating with the revised price target.
According to InvestingPro analysis, Zions appears slightly undervalued based on its Fair Value calculations, with an overall Financial Health Score of FAIR. Investors seeking deeper insights can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers, which provides detailed analysis of Zions among 1,400+ US stocks.
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