The Zip Co Ltd (ASX: Z1P) share price is trading notably higher for a second day in a row on Tuesday.
In afternoon trade, the buy now pay later (BNPL) provider’s shares are up a sizeable 9% to $7.90.
This means the Zip share price is now up 19% in the space of two days.
Why is the Zip share price racing higher?
Investors have been bidding the Zip share price higher this week after Afterpay Ltd (ASX: APT) agreed to be acquired by US payments giant Square.
This sparked hopes that Zip may receive a takeover approach of its own. Especially given recent speculation that rival Klarna has been building up a secret position in the BNPL provider.
Can its shares keep rising?
The good news for shareholders is that one leading broker believes the Zip share price can still keep rising.
According to a note out of Citi this morning, its analysts have retained their buy rating and $8.90 price target on the company’s shares.
Based on the latest Zip share price, this implies potential upside of 12.5% over the next 12 months.
What did the broker say?
While Citi acknowledges that Square’s acquisition of Afterpay increases the competitive risks for Zip and its QuadPay business, it also notes that it highlights its takeover appeal.
Citi commented: “We see mixed read-throughs for Zip from Square’s takeover of Afterpay – on the one hand it increases the takeover appeal for Zip, especially given the fast growing US business. However, arguably the Afterpay sale speaks to the importance of scale especially given increasing competition and our concern is that the combination of Square and Afterpay increases the medium-term risk for Zip given it increases the scale disadvantage of Quadpay relative to its competitors in the US.”
The post Top broker gives its verdict on the Zip (ASX:Z1P) share price appeared first on The Motley Fool Australia.
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More reading
- Why Afterpay, Bellevue Gold, Pilbara Minerals, & Zip are charging higher
- Here’s why the Zip (ASX:Z1P) share price is rocketing 8%
- What does Afterpay’s takeover mean for the Zip (ASX:Z1P) share price?
- ASX 200 rises, Afterpay soars, Zip jumps
- These are the 10 most shorted ASX shares
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.
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