On Tuesday, Stephens, a financial services firm, raised the price target for Zions Bancorp (NASDAQ:ZION) to $51.00, up from the previous $48.00, while keeping an Equal Weight rating on the stock. This adjustment follows Zions Bancorp's second-quarter earnings for 2024, which surpassed analyst expectations.
The company reported an operating earnings per share (EPS) of $1.21, compared to the consensus forecast of $1.12. The beat was attributed mainly to a lower provision for credit losses, and operating pre-provision net revenue (PPNR) was approximately 1.5% higher than the consensus estimate.
After the second quarter ended, Zions Bancorp successfully transitioned some of its deposit accounts to a new core processing system, marking a significant step toward phasing out its legacy systems.
The migration of non-interest bearing (NIB) deposits has been slower than anticipated, but this has been factored into a more optimistic net interest income forecast for the second quarter of 2025 compared to the consensus. The forecasts by Stephens remain more conservative, projecting a 4.5% year-over-year increase for the same period.
The firm also updated its "latent" rate sensitivity analysis. It now assumes that the total cost of deposits will rise by 20 basis points (bps), a decrease from the 51bps increase anticipated in the previous quarter's net interest income (NII) outlook for the first quarter of 2025.
Additionally, Zions Bancorp experienced a notable increase in classified loans, which went up by $298 million or 31% quarter-over-quarter, with 70% of this increase within the commercial and industrial (C&I) loan portfolio. Criticized loans also rose by $284 million or 17%, with multi-family loans being specifically mentioned during the earnings call.
The report from Stephens provided a detailed analysis of Zions Bancorp's quarterly loan and deposit trends, asset quality, and deposit beta trends. Despite the changes in financial metrics and the ongoing updates to the company's core systems, Stephens has chosen to maintain its Equal Weight rating on the stock.
In other recent news, Zions Bancorp reported strong second-quarter earnings, surpassing revenue expectations and demonstrating effective core expense management. This led RBC (TSX:RY) Capital Markets and Citi to raise their price targets for Zions Bancorp to $54.00 and $53.00 from $48.00 and $45.00, respectively, while maintaining their ratings.
However, UBS lowered its price target from $47.00 to $45.00, citing concerns about the bank's Net Interest Income trajectory and its position in a high-interest-rate environment. All these recent developments reflect the analysts' varying perspectives on Zions Bancorp's financial performance based on its recent earnings report and future expectations.
Zions Bancorp also declared a quarterly dividend of $0.41 per common share and regular quarterly dividends on its perpetual preferred shares, demonstrating the bank's commitment to providing value to its shareholders.
InvestingPro Insights
Following the recent earnings beat and Stephens' updated price target for Zions Bancorp, InvestingPro data and tips offer additional insights into the company's financial health and market performance. With a solid market capitalization of $7.31 billion and a Price/Earnings (P/E) ratio of 12.45, Zions Bancorp shows stability in its valuation. The company's commitment to shareholder returns is evident as it has raised its dividend for 11 consecutive years and maintained dividend payments for 54 consecutive years, highlighting a strong track record of returning value to investors.
InvestingPro Tips suggest a positive outlook, with 6 analysts having revised their earnings upwards for the upcoming period, indicating confidence in the company's future performance. Moreover, Zions Bancorp has delivered strong returns over the last month and three months, with a 19.95% and 19.62% total price return respectively, reflecting robust short-term market confidence. These recent gains align with Stephens' optimistic net interest income forecast, suggesting potential for continued growth.
For readers interested in deeper analysis and additional InvestingPro Tips, there are 9 more tips available, which can provide further guidance on Zions Bancorp's investment potential. To explore these insights, visit https://www.investing.com/pro/ZION and remember to use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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