Broker issues a BUY rating - $4 target price

Jeffries has in the last 24 hours issued a BUY, with a $4.20 price target !!!

ZIP Co (ASX: ZIP)

• Broker: Jeffries
• Rating: BUY (up from HOLD)
• Target: $4.20 (currently $1.71)

Financial services and BNPL provider Zip Co has arguably been the biggest casualty of the February reporting season so far.

Misses on revenue (up 29.2% to $658.1m but 1% below consensus), cash EBITDA (up 85.6% but 5% below expectations) and US customer growth saw ZIP crash 38% last week.

But analysts remain more optimistic than investors, with many maintaining Buy ratings, albeit with lower targets. Jeffries has upgraded its target from Hold to Buy, believing the results-led selloff was overdone and now presents a potential buying opportunity.

While it has lowered its price target to $4.20, at current prices that represents good upside potential. Analyst Roger Samuel conceded that Zip's long-term 8% margin target may be hard to maintain, but upgraded FY27-28 cash EBITDA forecasts and strong operating leverage were positives.