Tuesday, DA Davidson maintained a Buy rating on shares of Zions Bancorp (NASDAQ:ZION) and increased the price target to $57 from $50, citing a significant rise in the bank's expected net interest income (NII). The upgraded price target reflects a positive adjustment based on the bank's performance and anticipations for the coming year.
The bank's NII outlook for the second quarter of 2025 is now set at 6.3%, a notable jump from the 1.8% previously anticipated for the first quarter of 2025. This improved outlook is attributed to better-than-expected behavior in deposit costs and migration, surpassing the conservative estimates Zions Bancorp had initially set.
Further, the total deposit beta, which measures the sensitivity of deposit interest rates to changes in the overall interest rate, is anticipated to rise to 44% by the second quarter of 2025, compared to 40% in the same period of the previous year. This figure is also more favorable than the earlier forecast of 49%.
However, the bank's credit trends revealed a mix of outcomes, with an increase in criticized and classified loans for another consecutive quarter. Despite these mixed credit trends, Zions Bancorp expects that any potential losses will be manageable over the next few quarters, indicating a stable financial outlook.
The new price target of $57 is based on a target price-to-earnings (P/E) multiple of 11.2 times DA Davidson's 2025 earnings per share (EPS) forecast of $5.02 for Zions Bancorp. The revised target suggests confidence in the bank's future performance and its ability to manage its financial health effectively.
In other recent news, Zions Bancorp has been the focus of various analyst firms following its robust Q2 results. Baird raised its price target for the bank to $52, acknowledging that Zions' core pre-provision net revenue exceeded both market and Baird's own forecasts.
Stephens, RBC Capital Markets, and Citi also increased their targets for Zions Bancorp to $51, $54, and $53 respectively, while UBS lowered its target to $45, citing concerns about the bank's Net Interest Income trajectory in a high-interest rate environment.
Zions Bancorp reported an operating earnings per share of $1.21, surpassing the consensus forecast of $1.12. The bank also declared a quarterly dividend of $0.41 per common share and regular quarterly dividends on its perpetual preferred shares, reflecting its commitment to providing value to shareholders.
These are some of the recent developments for Zions Bancorp, with various analyst firms providing their perspectives and forecasts based on the bank's recent financial performance. It is important to note that while some firms have raised their price targets for Zions Bancorp, others have chosen to lower theirs, reflecting differing views on the company's future trajectory.
InvestingPro Insights
With Zions Bancorp (NASDAQ:ZION) receiving a positive outlook from DA Davidson, several metrics and tips from InvestingPro reinforce the bank's promising financial trajectory. Zions Bancorp has demonstrated a commitment to shareholder returns, having raised its dividend for an impressive 54 consecutive years. The bank's recent performance could instill investor confidence, with a strong return of nearly 20% over the last month.
The bank's financials, according to InvestingPro data, show a solid market capitalization of $7.31 billion and a P/E ratio that stands at 11.93, very close to the P/E multiple used by DA Davidson for their price target. The bank's revenue for the last twelve months as of Q1 2024 was $2.918 billion, despite a slight decline in growth. Moreover, the bank's dividend yield is currently attractive at 3.31%, with the last dividend's ex-date on May 15, 2024.
For investors seeking more in-depth analysis, there are additional InvestingPro Tips available, including insights on earnings revisions and profitability predictions for the year. To explore these valuable tips and more, visit https://www.investing.com/pro/ZION. Remember to use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, unlocking even more financial insights.
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