Jefferies is out with a research report this morning, where it downgrades shares of Zions Bancorp (NASDAQ: ZION) to Hold, from Buy; it has a $26.00 price target on the stock.

The Jefferies analysts cited valuation as the main culprit for the downgrade as ZION now trades at 1.25x tangible book vs. its peer group average of 1.6x, which appropriately reflects a slight discount due to late-stage CRE exposure.

The analysts also believe the risk/reward profile is more balanced given the bank is still unprofitable and remains in TARP.

As for valuation, the analysts remarked, “Our price target of $26 applies a 13x multiple to our normalized earnings estimate of $2.45 (discounted 2 years at 10%). This is lower than the bank’s historical forward multiple of 14x (2001-2007) to account for lower post-cycle growth.”

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