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Barclays Weighs In: Zions Bancorp's Capital Plan Looks Solid, Raises Estimates

ZION

Barclays raised its EPS estimates for Zions Bancorp (NASDAQ: ZION), as the company's capital plan came in ahead of the brokerage's expectation for a total payout ratio of closer to 50 percent.

"The Fed did not object to Zion's capital plan submitted in April, which calls for an increase in its dividend and a resumption of share repurchase activity," analyst Matthew Keating summarized.

Zion's capital plan calls for an increase in quarterly dividend by $0.02 to $0.08, up to $180 million of common stock repurchases and up to $144 million of preferred equity redemption.

Related Link: Federal Reserve Does Not Object To Zion's Bancorporation 2016 Capital Plan

"Based on the consensus earnings expectations for the period covering its capital plan, Zion is expected to return 61 percent of its net income (up from less than 15 percent at this time last year), comprised of a 16 percent dividend payout ratio and a 45 percent share repurchase payout ratio," Keating said.

"We are updating our 2016E and 2017E EPS to reflect its stronger-than-anticipated share repurchase ask and planned preferred equity redemption," according to Keating.

Keating raised his 2016 EPS estimate by $0.14 to $1.74 and 2017 EPS view by $0.10 to $2.25. The Street expects earnings of $1.77 a share for 2016 and $2.19 a share for 2017.

Keating maintains his Overweight rating and $30 price target on the stock, which closed Wednesday's regular trading session at $24.99.



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