We are upgrading our recommendation on BOK Financial Corp. (BOKF) to Outperform from Neutral based on the improvements in its credit quality trends amidst an economic recovery along its primary markets. The company's first-quarter 2012 earnings were well above the Zacks Consensus Estimate, aided by growth in net interest revenue as well as fees and commissions revenue.
It also reported growth in commercial loan balances and increased its quarterly cash dividend by a nickel. While a low interest rate environment and regulatory issues are the headwinds, we believe that its diverse revenue mix and favorable geographic footprint will back its growth.
Our six-month target price of $65.00 equates to 14.3x our earnings estimate for 2012. Combined with a quarterly dividend of $0.38 per share, this price target implies an expected total return of 21.2% over that period. This is consistent with our Outperform recommendation on the shares.
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