Baird on Monday lowered its rating on Zions Bancorp (NASDAQ: ZION) from Outperform to Neutral, assigning a price target of $65.00 - a figure that is essentially in line with the stock's current market quotation of $65.29. Data from InvestingPro shows ZION trading close to a 52-week high of $66.17.
The research house framed the downgrade as an adjustment to valuation rather than a change in the bank's underlying performance profile. Baird said that, with market sentiment toward the bank having recovered since late 2025, the share price now reflects a fair value. When Baird upgraded ZION in October, market participants had reduced the bank's market capitalization by approximately $1 billion following a $60 million loss - a loss Baird characterized as being smaller than two weeks of ZION's pre-provision net revenue, or PPNR.
This shift in investor outlook is visible in the stock's recent returns: a 27.61% price gain over the past six months and a 17.91% rise over the past 12 months, figures that Baird cited in explaining that the bank's market positioning has improved.
Despite trading at a lower valuation than some regional peers, Baird believes the current price level is reasonable given renewed market comfort with Zions' PPNR performance and its credit culture. Parallel analysis from InvestingPro, however, points to valuation metrics that could imply an attractive entry for value-focused investors. InvestingPro highlights a price-to-earnings ratio of 10.88 and a PEG ratio of 0.5. InvestingPro also notes that Zions has a long record of returning capital to shareholders through dividends, having paid dividends for 56 consecutive years.
Baird emphasized Zions' asset sensitivity compared with its bank coverage group. The firm pointed to the bank's notably high share of non-interest bearing deposits, which represented roughly 35% of total deposits in the fourth quarter of 2025 - the largest proportion among banks in Baird's coverage. The bank's total deposit cost was reported at about 1.56%, the third-lowest level among Baird-covered peers.
According to Baird, the strong deposit mix should support longer-term trends in net interest income and net interest margin. The firm tempered that view by warning that spread revenue could be pressured if the Federal Reserve pursues rate cuts that are deeper or arrive sooner than Baird currently expects.
InvestingPro's metrics assign Zions a "GOOD" overall financial health score, and analysts cited in the report expect the bank to remain profitable this year.
On the corporate actions front, Zions Bancorporation has authorized a $75 million share repurchase program for the first quarter of 2026, a board decision disclosed as the bank continues to manage capital, regulatory and market considerations. Zions' recent operating results informed some of the analyst re-evaluations: fourth-quarter 2025 core earnings per share came in at $1.72, ahead of consensus expectations.
That earnings beat has led several firms to revise price targets. TD Cowen lifted its target to $64 while keeping a Hold rating. Piper Sandler increased its target to $65 and maintained a Neutral rating. Stephens also raised its target to $65, citing the strong earnings print. DA Davidson preserved a Buy rating with a $75 target and referenced management's expectation of operating leverage in 2026 despite planned increases in marketing spending.
Collectively, these moves show a mix of confidence in Zions' earnings trajectory and caution on valuation. Baird's shift to Neutral signals that at current price levels, upside is more limited absent further improvements in fundamentals or market sentiment.
Key takeaways
- Baird downgraded Zions Bancorp to Neutral with a $65 price target, roughly matching the stock's prevailing price.
- Zions has shown strong recent share-price performance and posted Q4 2025 core EPS of $1.72, ahead of expectations.
- The bank's deposit composition - a high share of non-interest bearing deposits and low overall deposit cost - supports margins, but revenue spreads may be sensitive to more aggressive Fed rate cuts.
Outlook
Baird’s valuation-driven downgrade reflects the view that much of Zions’ recent recovery is already priced in. Other analysts have adjusted targets upward following the quarterly beat, but ratings range from Hold/Neutral to Buy. The bank’s repurchase authorization and dividend longevity reinforce shareholder-return themes, while deposit structure and cost metrics underline the key drivers of net interest income going forward.