Jefferies cuts Zions Bancorp stock price target on NII miss
Jefferies has reduced its price target for Zions Bancorp stock from $80 to $75 while keeping a Buy rating. The bank's latest quarterly results showed a core earnings per share of $1.77, surpassing Jefferies' own estimate of $1.63 and the average analyst estimate of $1.66. However, core pre-provision net revenue of $338 million fell short of the projected $346 million.
Despite this, Zions appears undervalued according to InvestingPro's Fair Value calculation. The bank's net interest margin fell by 4 basis points to 3.23% due to higher deposit costs and excess liquidity. Net interest income and fees failed to meet expectations, but credit performance helped the earnings beat. Zions expects 8% to 12% growth in net interest income over the next year, assuming three interest rate hikes.
The bank forecasts a mid-3% net interest margin by 2027 through asset repricing, balance sheet restructuring, and reduced wholesale funding. Net charge-offs dropped to 2 basis points, and classified loans decreased, though nonaccrual loans rose by $19 million. Zions has raised its dividend for 13 consecutive years, currently offering a 3.04% yield.
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