RBC Capital Markets has adjusted its outlook on Zions Bancorp (NASDAQ: ZION), increasing the bank's price target to $57.00 from the previous $55.00.
The analyst maintained a Sector Perform rating on the stock, indicating a neutral perspective on its investment potential.
The decision to raise the price target follows a review of Zions Bancorp's third-quarter earnings, which revealed robust core trends. The performance was notably marked by favorable revenue trends and well-managed expenses.
Despite observing some negative risk migration in multifamily and commercial classifieds as well as non-performing assets (NPAs), the analyst highlighted that credit costs remain low. Moreover, the management team at Zions Bancorp anticipates that loss content will stay controlled over time.
The updated 12-month outlook for Zions Bancorp was generally reiterated, suggesting stability in the bank's fundamental outlook. The RBC Capital analyst noted that the bank's consistent performance underpins their favorable view.
In other recent news, Zions Bancorp has reported a rise in net earnings for the third quarter of 2024, reaching $204 million, largely due to higher revenues and reduced expenses. This was accompanied by a modest growth in loans and an improvement in customer deposits, particularly non-interest-bearing deposits.
In addition, Zions Bancorp is set to acquire four FirstBank branches in California, pending regulatory approval. Analysts from Baird, Stephens, and Citi have adjusted their outlook, raising their price targets for Zions Bancorp while maintaining their neutral ratings. These adjustments reflect the company's recent performance, including a positive trend in net interest income and lower-than-expected operating expenses.
Despite a rise in non-performing assets and classified loans linked to challenges in the multifamily sector, Zions Bancorp's credit quality remains strong. Looking ahead, analysts predict stable to slightly increasing loan growth and a 1.4% increase in net interest income in Q3 2025.
InvestingPro Insights
Recent data from InvestingPro provides additional context to RBC Capital Markets' positive outlook on Zions Bancorp (NASDAQ:ZION). The bank's P/E ratio of 12.01 suggests it may be undervalued compared to industry peers, aligning with the analyst's increased price target. This is further supported by InvestingPro's fair value estimate of $61.45, which is higher than both the current price and RBC's new target.
InvestingPro Tips highlight Zions' strong dividend history, having raised its dividend for 11 consecutive years and maintained payments for 54 years. This demonstrates the bank's financial stability and commitment to shareholder returns, which could be attractive to income-focused investors.
The bank's profitability over the last twelve months and analysts' predictions of continued profitability this year reinforce RBC's positive stance on Zions' financial health. However, it's worth noting that Zions suffers from weak gross profit margins, which investors should monitor in light of the bank's well-managed expenses mentioned in the article.
For readers interested in a deeper analysis, InvestingPro offers 7 additional tips for Zions Bancorp, providing a more comprehensive view of the company's financial position and market performance.
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