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What these brokers think of the Zip (ASX:Z1P) share price after its update

Is the Zip share price in the buy zone?
The post What these brokers think of the Zip (ASX:Z1P) share price after its update appeared first on The Motley Fool Australia. –

The Zip Co Ltd (ASX: Z1P) share price has been a strong performer on Tuesday.

In early afternoon trade, the buy now pay later (BNPL) provider’s shares are up 3.5% to $6.99.

Why is the Zip share price charging higher?

Today’s gain by the Zip share price appears to have been driven by a positive reaction to the company’s first quarter update from a leading broker.

In case you missed it, for the three months ended 30 September, Zip reported record quarterly revenue of $136.8 million. This was up 89% year on year and 8% quarter on quarter.

This strong revenue growth was driven by a 101% increase in quarterly transaction volume to $1.9 billion and an 82% jump in customer numbers to 8 million. Zip also revealed that it successfully completed a global rebrand across six countries during the quarter.

What was the response?

The team at Morgans were pleased enough with Zip’s performance during the quarter. The broker noted that Zip’s quarter on quarter revenue growth of 8% was commendable.

However, it does have concerns that Zip could fall short of consensus revenue estimates in FY 2022. This has led to the broker retaining its add rating but trimming its price target to $8.56.

Nevertheless, based on the current Zip share price, this still implies potential upside of 22% for investors.

Anything else?

Elsewhere, the team at Citi have held firm with their neutral rating and $7.40 price target. This price target suggests there’s 6% upside for the Zip share price.

Citi commented: “1Q in-line with expectations as customer growth slows while increasing usage supports TTV. Z1P’s 1Q update was in-line with our expectations, except for the pick-up in arrears in ANZ. Looking ahead, 2Q is seasonally the more important quarter and the increase in marketing activity as part of the rebrand in the US could support customer acquisition and growth, however with customer additions slowing for the third consecutive quarter the key concern for us is whether Z1P can maintain its growth rates in the US with increasing competition. Maintain Neutral.”

The post What these brokers think of the Zip (ASX:Z1P) share price after its update appeared first on The Motley Fool Australia.

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More reading

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ASX 200 (ASX:XJO) midday update: Aristocrat’s $5bn acquisition, Zip falls on Q1 update

Zip (ASX:Z1P) share price edges higher after record quarterly update

Own Zip (ASX:Z1P) shares? Here’s the latest on the fintech’s US push

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 ZIPCOLTD FPO. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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