The Salt Lake City-Based Bank Goldman Sachs Is Buying Stock In

• Zions Bancorporation ZION shares have been treading an upward trajectory, rising over 68 percent year-to-date, after touching a low of $290 on January 15.
• Goldman Sachs’ Ryan M. Nash upgraded the rating on the company from Neutral to Buy, while maintaining the price target at $35.
• Zion is a self-help story that is likely to outperform the overall regional banks segment, Nash believes.

Analyst Ryan Nash said that regional banks had outperformed the overall market by 4 percent through August 16. Following this, these stocks had declined about 9 percent, underperforming the market by 2 percent, “amid tempered rate expectations.”

While rate hikes are likely to be slower, there are opportunities for outperformance by self-help companies like Zions, Nash added.

Zions appears poised for outperformance in the regional banking segment. In the report Goldman Sachs noted, “We see upside to efficiency expectations in 2016/2017,” as liquidity deployment, adding of swaps and fee income growth drive revenue growth.

Nash believes that Zions could be an emerging capital return story in 2016 as it is expected to have at least 260bps of excess capital under next year’s CCAR. The company’s de-risking attempts and transition to Basel III should prove fruitful.

The continued weakness in oil prices is unlikely to have a significant impact on Zions, as the company’s energy loans are a little more than 4 percent. Moreover, the energy concerns are largely reflected in Zion’s current stock valuation, the report stated.