On Tuesday, Jefferies made a bullish move on shares of Zip Co Ltd (Z1P:AU) (OTC: ZIZTF), upgrading the stock from Hold to Buy and increasing the price target to AUD2.50, up from the previous AUD1.95. The upgrade comes in response to Zip Co's optimistic trading outlook for the coming two years, which indicates substantial growth potential for its US operations.
Zip Co has demonstrated confidence in its business trajectory, particularly in the US market, where it expects to see customer numbers climb and transaction volume grow by more than 32%. This growth forecast is supported by Zip Co's successful integration with Google (NASDAQ:GOOGL) Pay and ongoing discussions with Apple (NASDAQ:AAPL), as confirmed by the company. These developments signal a potential for an expanded customer base and increased market penetration.
The new price target of AUD2.50 is based on a valuation approach that considers the US division of Zip Co as a technology company and its Australia and New Zealand (ANZ) operations as a consumer finance entity. This dual valuation reflects the firm's diverse business model and its positioning in different market segments.
Jefferies' positive outlook for Zip Co is further reinforced by the company's proactive engagement with major digital payment platforms, which could significantly enhance its visibility and accessibility to users. The integration with these platforms is a strategic move that could drive future growth and strengthen Zip Co's position in the competitive digital payments landscape.
This upgrade by Jefferies signals a vote of confidence in Zip Co's strategic direction and its ability to capitalize on the opportunities within the fintech sector. The raised price target suggests that Zip Co's stock may offer an attractive entry point for investors looking to benefit from the company's growth prospects.
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