Wall Street Analysts don’t believe in Zion Bancorp (ZION)… and that’s good for you.
The company went through the ringer in 2023. The stock is trading 150% above its 2023 lows as the regional bank recovery continues, but it’s basically break-even from where it sat at this point last year.
You would expect that Wall Street analysts took the opportunity to “buy low and sell high” on the stock, but they’re still sitting on the sidelines.
As of Friday, 16 of the 21 Wall Street firms covering ZION had it ranked a “hold” or a “sell”. This puts it among one of the best performing underdogs in the S&P 500.
Historically, this is a great spot to be in because of what happens next.
Here’s how it’s going to play out.
Nobody is going to appreciate lower interest rates more than the regional banks. Loan volume picks back up and that means higher revenues. At the same time, lower rates mean better margins as they’ll be paying less to get those deposit dollars. What I’m saying is that, bar a recession, the regional banks are getting ready to fly.
When that happens, the Wall Street analysts are going to have to start playing catch-up with the market.
That means that those 16 analysts that are on the wrong side of Zion will start upgrading the shares, driving prices higher.
From a technical standpoint, ZION is preparing to break above $45. This is the price where all hell broke loose last year as we witnessed history in the form of the regional bank meltdown following Silicon Valley Bank’s failure.
Bottom Line: Zion shares just traded in a bull market trend for the first time since September 2022. Watch for the analysts to start posturing for higher prices as the ZION trades to $50 over the next quarter.
About the Author
Chris Johnson (“CJ”), a seasoned equity and options analyst with nearly 30 years of experience, is celebrated for his quantitative expertise in quantifying investors’ sentiment to navigate Wall Street with a deeply rooted technical and contrarian trading style.