Is the Zip share price going to take off?

The Zip Co Ltd (ASX: ZIP) share price had a positive day on Wednesday.

Especially in comparison to BNPL rival Sezzle Inc (ASX: SZL), which continues its post-merger collapse with a 22% decline today.

At Wednesday’s close, the Zip share price was up 1% to 53.5 cents. This extends its two-day return to a sizeable 8%.

Where next for the Zip share price?

While the market may have responded positively to the termination of the Sezzle merger, one leading broker thinks it’s too soon for investors to get excited.

According to a note out of UBS, its analysts have reiterated their sell rating with a 45 cents price target.

This implies potential downside of almost 16% for investors over the next 12 months from current levels.

What is the broker saying?

While UBS suspects that the merger termination could slow down Zip’s cash burn, it believes its outlook still remains very uncertain.

Especially given how expensive it could be chasing growth in the US market where credit losses could be higher.

In fact, the broker has suggested that Zip might be better off divesting its international operations now the merger is off and focus on the core ANZ business instead.

Time will tell what happens, but it certainly should be an interesting few months for the Zip share price.

The post Is the Zip share price going to take off? appeared first on The Motley Fool Australia.

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More reading

• What’s the outlook for ASX BNPL shares in FY23?
• Sezzle shares plunge another 16%, now down 60% in a week
• ASX 200 midday update: ANZ confirms MYOB talks, energy shares fall
• Are falling BNPL shares pushing the ASX banks higher today?
• Outlook for Zip share price ‘uncertain’ following scrapped merger: UBS

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. has positions in 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 Scott Phillips.

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