On Tuesday, UBS adjusted its outlook on Zions Bancorp (NASDAQ:ZION), a prominent financial institution. The price target for the bank's shares has been lowered from $47.00 to $45.00, while the Neutral rating remains unchanged. The revision follows Zions Bancorp's first-quarter earnings for the year 2024, which provided insights into the bank's financial performance and future expectations.
The UBS analyst highlighted that the Net Interest Income (NII) trajectory is now widely anticipated by the market after the latest earnings report. Zions Bancorp's effective management of deposit costs amidst a competitive environment was noted as a positive aspect.
However, it was pointed out that despite a quarter-over-quarter decrease in Interest Bearing Deposit (IBD) costs by 3 basis points, the overall cost of deposits remained unchanged due to a shift in the composition of the bank's deposit book.
Concerns were raised regarding Zions Bancorp's liability-sensitive position, which could be vulnerable in the context of a persistent high-interest-rate environment. The bank's forward guidance for the first quarter of 2025 suggests stable to slightly increasing NII, based on a projection that includes three 25 basis point reductions by the end of 2024. This contrasts with the current market expectations, which only price in two such cuts.
The UBS analyst believes that there is a downside risk to the NII outlook, considering the possibility of more rate cuts being factored out of the forward curve. This risk is seen to outweigh the potential benefits of continued control over deposit costs in the following quarters. Consequently, the analyst anticipates that Zions Bancorp's shares will likely remain within a certain trading range going forward.
InvestingPro Insights
The recent analysis by UBS on Zions Bancorp (NASDAQ:ZION) has sparked interest among investors, especially following the bank's first-quarter earnings report for 2024. To provide a more comprehensive view, InvestingPro data and tips offer additional insights. Zions Bancorp currently holds a market capitalization of approximately $6.1 billion, with a trailing twelve-month Price/Earnings (P/E) ratio of 9.5, indicating a potential value play in the financial sector. The bank's dividend yield stands at a notable 3.97%, underscoring its commitment to shareholder returns, which is further evidenced by its track record of raising dividends for 54 consecutive years.
InvestingPro Tips reveal that Zions Bancorp has experienced a significant price increase over the last six months, reflecting a 40.64% total return. This uptick in price aligns with analysts' predictions that the company will be profitable this year, a sentiment supported by the bank's profitability over the last twelve months. However, it's important for investors to note that six analysts have revised their earnings downwards for the upcoming period, which could signal caution.
For those looking to delve deeper into Zions Bancorp's financials and future outlook, there are additional InvestingPro Tips available at: https://www.investing.com/pro/ZION. These tips can provide further guidance on investment decisions. Moreover, readers can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking a wealth of financial analysis and market data.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.