Top broker says Zip (ASX:Z1P) share price can rise 22%

Zip’s shares could be good value. Here’s why…
The post Top broker says Zip (ASX:Z1P) share price can rise 22% appeared first on The Motley Fool Australia. –

It has been a disappointing few weeks for the Zip Co Ltd (ASX: Z1P) share price.

The buy now pay later (BNPL) provider’s shares are down 0.5% to $6.80 this afternoon.

This means the Zip share price is now down 20% since this time last month.

Why is the Zip share price falling?

Investors have been selling down the Zip share price since the release of its full year results.

Although the company delivered stellar sales growth, its spiralling costs appear to have spooked the market.

Not even an update at its Retail Investor Day event this week has been able to lift its shares. That update revealed plans to expand into savings accounts and cryptocurrency trading and transacting.

Is this a buying opportunity for investors?

According to a note out of Jefferies, its analysts believe the Zip share price is good value at the current level.

This morning the broker retained its buy rating and $8.28 price target on the company’s shares. Based on the current Zip share price, this implies potential upside of almost 22% over the next 12 months.

The note reveals that Jefferies believes that Zip’s shares are trading at too large a discount to rivals Afterpay Ltd (ASX: APT) and Affirm.

The broker estimates that Zip’s shares trade at 9x FY 2022 sales, whereas Afterpay and Affirm trade on 24x and 25x multiples, respectively.

And while the broker acknowledges that their leadership positions in an increasingly competitive industry warrant higher multiples, it doesn’t believe the difference should be as great as it is.

Particularly given Zip’s differentiated strategy, which it notes now includes cryptocurrencies and physical payment cards. The broker feels this strategy is the right way to go and also feels that its increased costs to support its global expansion are justified.

All in all, it is positive on the company’s growth outlook and continues to rate Zip’s shares as a buy.

The post Top broker says Zip (ASX:Z1P) share price can rise 22% appeared first on The Motley Fool Australia.

Should you invest $1,000 in Zip right now?

Before you consider Zip, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Zip wasn’t one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of August 16th 2021

More reading

ASX 200 rises, Zip falls, Brambles sinks

Why Australian Ethical, Brambles, Novonix, & Zip shares are tumbling lower

Leading brokers name 3 ASX shares to sell today

ASX 200 (ASX:XJO) midday update: Westpac asset sale blocked, Zip crypto update

Zip (ASX:Z1P) share price lower despite savings and crypto products update

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended AFTERPAY T FPO and ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!