UPDATE: BMO Capital Markets Initiates Coverage on Zions Bancorporation with Outperform Rating, $30 PT on Earnings Power

In a report published Wednesday, BMO Capital Markets initiated coverage on Zions Bancorporation

with an Outperform rating and $30.00 price target. BMO Capital Markets noted, “We are initiating coverage of Zions Bancorporation with an Outperform rating and a $30 price target. Zions' earnings are depressed by this low interest rate environment; however, we believe there is significantly higher earnings power at Zions when rates start moving up and commercial loan demand strengthens, much more so than at the average regional bank. Conservatively, we peg Zions' earnings power at $3.00 per share, assuming that its margin and credit costs revert back to historical averages; this would be more than 50% above our 2014 EPS estimate. While rates are not poised to rise anytime soon, Zions does not even need a rate hike for the margin to recover; if loan growth picks up—and we expect it will—the redeployment of significant excess liquidity into loans could expand the margin meaningfully. Near term, the positives include: 1) earnings leverage from credit quality improvement; 2) the opportunity to restructure its high-cost capital structure; 3) average loan growth reaching a positive inflection point, after several years of contraction; 4) abating net interest margin pressure; and 5) a modest dividend hike anticipated post CapCR results.” Zions Bancorporation closed on Tuesday at $24.50.