Zions Bancorporation: Incremental Earnings and Credit Improvements Offset by Valuation and Profitability Constraints, Justifying Hold Rating

Analyst Ben Gerlinger of Citi maintained a Hold rating on Zions Bancorporation National Association, with a price target of $62.00.

Ben Gerlinger has given his Hold rating due to a combination of factors related to Zions Bancorporation’s earnings outlook, risk profile, and valuation. He made a slight upward revision to his loan growth expectations for the near term, which provides a modest boost to projected net interest income, but this benefit is partly offset by somewhat higher anticipated operating costs. At the same time, he sees improving signs in the bank’s commercial real estate credit trends, suggesting that the period of adverse credit migration may be approaching its end and that credit risk is becoming more manageable.

Despite these incremental positives, Gerlinger remains cautious about the bank’s longer-term profitability potential, which, in his view, does not yet justify a more constructive rating. He modestly raised his target price to $62, reflecting a lower assumed beta in his cost-of-equity framework and a slightly stronger long-term capital position, supported by the improved near-term earnings outlook. However, with the expected share price upside of roughly 5% and a valuation that he does not see as compelling versus the risks and profitability constraints, he concludes that a Neutral/Hold stance is appropriate at this time.

Gerlinger covers the Financial sector, focusing on stocks such as Comerica, First Citizens BancShares, and Banc of California. According to TipRanks, Gerlinger has an average return of 15.2% and a 76.69% success rate on recommended stocks.

In another report released on December 18, Piper Sandler also maintained a Hold rating on the stock with a $63.00 price target.