Why Zions Bancorp (ZION) Was Upgraded

Story updated at 9:40 a.m. to reflect market activity.

NEW YORK (TheStreet) -- Zions Bancorp (ZION) was upgraded to "neutral" from "sell" by Goldman Sachs.

Zions Bancorp gained 1.8% to $30.86 Friday.

Goldman Sachs raised its price target for the regional bank to $33 from $29.

Analyst Ryan Nash said Zion Bancorp's rick profile is lower than it was. To explain the upgrade, the analyst wrote "1) its story is becoming cleaner (CDO sales, TRS termination, capital clarity), 2) its outlook for loan growth is improving and 3) leverage to higher rates should support shares; we had previously been less optimistic on these themes."

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Separately, TheStreet Ratings team rates ZIONS BANCORPORATION as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

"We rate ZIONS BANCORPORATION (ZION) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its expanding profit margins and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including deteriorating net income and disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The gross profit margin for ZIONS BANCORPORATION is currently very high, coming in at 94.02%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -9.03% is in-line with the industry average.
  • ZIONS BANCORPORATION has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, ZIONS BANCORPORATION increased its bottom line by earning $1.58 versus $0.97 in the prior year. This year, the market expects an improvement in earnings ($1.83 versus $1.58).
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 20.3%. Since the same quarter one year prior, revenues fell by 16.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Commercial Banks industry and the overall market on the basis of return on equity, ZIONS BANCORPORATION underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Commercial Banks industry. The net income has significantly decreased by 171.2% when compared to the same quarter one year ago, falling from $58.25 million to -$41.47 million.
  • You can view the full analysis from the report here: ZION Ratings Report

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