NEW YORK (TheStreet) -- Zions Bancorporation (ZION) has been downgraded to "market perform" from "outperform" with a $30 price target, BMO Capital said Monday. The firm said the ratings revision was due to the failure of the stress test likely hanging over the stock for some time.
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Separately, TheStreet Ratings team rates ZIONS BANCORPORATION as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate ZIONS BANCORPORATION (ZION) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its expanding profit margins and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
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.
- Compared to its closing price of one year ago, ZION's share price has jumped by 29.67%, exceeding the performance of the broader market during that same time frame. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
- 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 ($1.80 versus $1.58).
- ZION, with its decline in revenue, slightly underperformed the industry average of 11.7%. 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.
- You can view the full analysis from the report here: ZION Ratings Report