If you’re a fan of growth shares, then you may want to look closely at the three shares listed below.

Here’s why these could be growth shares to buy:

Adore Beauty Group Limited (ASX: ABY)

The first ASX growth share to look at is Adore Beauty. It is an integrated content, marketing and e-commerce retail platform with a focus on the $11 billion per year Australian beauty and personal care market. While it has been growing at a rapid rate in recent years and now has almost 1 million active customers, it still only has a tiny share of the market. The good news is that Adore Beauty has been tipped to keep winning market share over the next decade as the structural shift online continues. This bodes well for its future growth.

The team at UBS is positive on Adore Beauty. The broker currently has a buy rating and $4.70 price target on its shares.

Altium Limited (ASX: ALU)

Another growth share for investors to consider buying is Altium. It is the electronic design software provider behind the Altium 365 and Altium Designer platforms. These platforms are the leaders in their field and are now aiming to dominate their market. This bodes well for its future growth given how the Internet of Things (IoT) and AI markets are underpinning an explosion of electronic devices globally. This is expected to lead to a significant increase in demand for electronic design software in the future.

The team at Bell Potter is bullish on Altium. It currently has a buy rating and $38.75 price target on the company’s shares.

Megaport Ltd (ASX: MP1)

A final ASX growth share that could be a buy is Megaport. It is a leading cloud connectivity and networking solutions provider which looks set to benefit massively from two long-term structural tailwinds. These are the adoption of public cloud (and multi-cloud usage) and the transition towards Networking as a Service (NaaS). Goldman Sachs has been looking into its opportunity and estimates it to be $129 billion per annum across its current geographies.

In light of this, it won’t be a surprise to learn that Goldman has a buy rating and $19.50 price target on its shares.

The post 3 buy-rated ASX growth shares analysts are recommending appeared first on The Motley Fool Australia.

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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 and has recommended Altium and MEGAPORT FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Adore Beauty Group Limited. The Motley Fool Australia has recommended Adore Beauty Group Limited and MEGAPORT 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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Last week saw a number of broker notes hitting the wires once again. Three buy ratings that investors might want to be aware of are summarised below.

Here’s why brokers think investors ought to buy them next week:

GQG Partners Inc (ASX: GQG)

According to a note out of Morgans, its analysts have retained their add rating but trimmed their price target on this fund manager’s shares to $2.27. Morgans was pleased with GQG’s full year results and expects more of the same in FY 2022 thanks to the positive performance of its strategies. The broker expects this to solidify its near-term flows outlook. In light of this, it feels the recent de-rating of its shares is unwarranted and a buying opportunity. The GQG share price was trading at $1.32 at Friday’s close.

Transurban Group (ASX: TCL)

A note out of Macquarie reveals that its analysts have retained their outperform rating with a slightly trimmed price target of $14.80. The broker has been looking at recent traffic data and was pleased to see that some of its roads were now at pre-pandemic levels. Others, particularly those linking to airports, are expected to follow in time once travel markets return to normal. The Transurban share price was fetching $12.59 at the end of the week.

WiseTech Global Ltd (ASX: WTC)

Analysts at Morgan Stanley have retained their overweight rating and lifted their price target on this logistic solutions company’s shares to $50.00. This follows the release of the company’s half year results at the end last month. According to the note, the broker thought that WiseTech delivered a strong half year result, which has led to its analysts upgrading their earnings forecasts. The WiseTech share price ended the week at $46.03.

The post Top brokers name 3 ASX shares to buy next week appeared first on The Motley Fool Australia.

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• 2 high-yield ASX dividend shares for March 2022

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 and has recommended WiseTech Global. The Motley Fool Australia owns and has recommended WiseTech Global. 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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Some of the leading ASX growth shares have seen their share prices fall significantly over the last few months.

A few may be dropping because they are reporting a reversal of the gains from COVID-19. But some are still reporting quick growth, it may be other factors that are causing the decline such as the Russian invasion of Ukraine or the fast pace of inflation (and expected interest rate rises).

Cettire Ltd (ASX: CTT)

The Cettire share price has fallen by 46% since the start of the year.

What does Cettire do? It’s a retailer of personal luxury products on its website, with more than 200,000 products from over 1,700 luxury brands.

The ASX growth share recently announced its FY22 half-year result which included a high level of growth. Sales revenue soared 181% to $113.7 million whilst the delivered (to customer) profit jumped 118% to $24.7 million. Its offering is resonating with global customers.

Management boast of the scalability of the company’s capital-light, high cash-generating business model which is helping re-invest back into the company and grow the business. Despite investing in things like marketing, the operating cash flow increased 43% to $12.3 million.

January 2022 gross revenue was up 242% year on year, showing that the rapid growth continues.

It’s working on a number of growth areas, including the launch of a mobile app which is expected to improve conversion rates over time. The launch of the beauty category will expand the company’s total addressable market.

Cettire has also announced that it’s entering the mainland Chinese market, which is being helped by a partnership with e-commerce giant JD.com.

Pointsbet Holdings Ltd (ASX: PBH)

Over the last six months, the Pointsbet share price has fallen by 63%.

Pointsbet is a growing global corporate bookmaker, with much of its attention pinned on the huge market of the USA where it is quickly expanding its presence.

Looking at some of the key numbers of sports betting in the FY22 half-year result, turnover increased by 22% to $2.3 billion and the gross win margin increased by 2.7 percentage points, which helped grow the gross win by 63% to $250.9 million. The ASX growth share’s US saw the gross win rise 299% to $70.8 million.

The overall net win increased 77% to $146.7 million.

But the company continues to announce new market access and jurisdiction launches. Areas opened during the first half will benefit over time as more customers try out Pointsbet. The company also announced a number of positives after the HY22 reporting period.

For example, on 8 February 2022, Pointsbet took its first sportsbook bet in Pennsylvania. On 27 January, Pointsbet launched iGaming operations in West Virginia.

Canada is another geographic region that the ASX growth share’s management have their eyes on. On 3 February 2022, Pointsbet Canada received approval by the Alcohol and Gaming Commission of Ontario to be licensed a sportsbook in Ontario.

However, whilst the company is in this high-growth phase, its losses are increasing. The HY22 statutory net loss worsened by 71% to $146.4 million.

The post Beaten-up: Are these 2 top ASX growth shares turnaround buys? appeared first on The Motley Fool Australia.

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• Why Domino’s, Magellan, PointsBet, and Zip shares are falling
• ASX 200 (ASX:XJO) midday update: Rio Tinto, South32 storm higher, PointsBet sinks
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Cettire Limited and Pointsbet Holdings Ltd. The Motley Fool Australia has recommended Cettire Limited and Pointsbet Holdings Ltd. 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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March 2022 could be the month to jump on some of the leading ASX dividend shares after a period of volatility.

Concerns about the Russian invasion of Ukraine as well as the ongoing impacts of inflation give investors plenty to think about.

But regardless of what happens with share prices, ASX dividend shares may be able to keep producing cash payments for investors.

With that in mind, here are two income candidates:

Charter Hall Long WALE REIT (ASX: CLW)

This real estate investment trust (REIT) is one of the larger ones on the ASX.

It owns a diversified portfolio of property across a number of different sectors including pubs and bottle shops, ‘government’, telecommunications, grocery and distribution, fuel and convenience, food manufacturing, waste and recycling and ‘other’ (which includes life sciences, retail, banking, financial services and so on). The focus is on defensive industries that are resilient to economic shocks.

The ASX dividend share has many high-quality tenants, including Endeavour Group Ltd (ASX: EDV), Telstra Corporation Ltd (ASX: TLS), BP, Inghams Group Ltd (ASX: ING), Coles Group Ltd (ASX: COL), David Jones, Metcash Limited (ASX: MTS) and Arnott’s Group. The REIT says it has a strong and stable tenant base.

Charter Hall Long WALE REIT boasts of a track record of delivering distribution growth to investors. It’s expecting to deliver a distribution of at least 30.5 cents per security in FY22, which would be up at least 4.5% on FY21. This translates into a distribution yield of at least 6% in this financial year.

The long portfolio weighted average lease expiry (WALE) gives the portfolio “long-term income security”. At 31 December 2021, the WALE was 12.2 years.

Citi rates it as a buy, with a price target of $5.71, which is lower than its net tangible assets (NTA) of $5.89 at 31 December 2021.

Rural Funds Group (ASX: RFF)

Since the start of 2022, the Rural Funds share price has fallen by 15%. It hasn’t been this low since October 2021.

It’s another REIT, but this one specialises in agricultural properties. Rural Funds owns a portfolio spread across different farm types including almonds, vineyards, macadamias, cropping and cattle.

The ASX dividend share has a goal of growing the distribution to investors by at least 4% per annum. It has managed to achieve this goal over the last several years.

It manages to achieve this target through a mixture of different methods.

Organic growth of rental revenue is supported by annual indexation and market rent revenues. Most lease revenue comes from listed and major corporate food-producing businesses. No rent relief was required during COVID-19. Around 44% of lease income is based on CPI inflation (which is increasing), whilst 34% has fixed indexation with a market review mechanism.

Rural Funds has a WALE of 9.2 years, which is one of the longest in the sector.

Another way that the REIT grows its revenue is by investing in its farms. This can mean either improving the existing farm, such as more water access points, or changing the farm to a more profitable use.

In FY22 it is expecting to pay a distribution of 11.73 cents per unit, which equates to a distribution yield of 4.4%.

The post Are these 2 top ASX dividend shares buys in March 2022? appeared first on The Motley Fool Australia.

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• 3 reasons why the Charter Hall Long WALE REIT (ASX:CLW) share price is a top buy for dividends
• Rural Funds (ASX:RFF) share price jumps on first-half financials

Motley Fool contributor Tristan Harrison owns RURALFUNDS STAPLED. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns and has recommended COLESGROUP DEF SET, RURALFUNDS STAPLED, and Telstra Corporation Limited. 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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Once again, a large number of broker notes hit the wires last week. Some of these notes were positive and some were bearish.

Three sell ratings that investors might want to hear about are summarised below. Here’s why top brokers think investors ought to sell these shares next week:

Insurance Australia Group Ltd (ASX: IAG)

According to a note out of Morgan Stanley, its analysts have retained their underweight rating and $3.90 price target on this insurance company’s shares. Its analysts believe IAG is growing its gross written premium (GWP) slower than system, which is extending its ongoing market share losses. The broker doesn’t appear confident that this trend will reverse any time soon and thus feels investors would be better off looking elsewhere in the sector. The IAG share price ended the week at $4.45.

Magellan Financial Group Ltd (ASX: MFG)

A note out of UBS reveals that its analysts have retained their sell rating and cut their price target on this fund manager’s shares to $15.40. This follows the release of another update which revealed a further reduction in its funds under management (FUM). In addition, the broker highlights that a ratings agency has downgraded its flagship Global Fund. This may not bode well for its FUM. The Magellan share price was fetching $15.48 at Friday’s close.

Reece Ltd (ASX: REH)

Analysts at Citi have retained their sell rating and cut their price target on this plumbing parts company’s shares to $16.83. According to the note, although Citi acknowledges that Reece delivered a solid half year result last month, it isn’t enough for a change in its recommendation. The broker continues to struggle with the multiples that the company’s shares trade on. The Reece share price was trading at $18.94 on Friday afternoon.

The post Top brokers name 3 ASX shares to sell next week appeared first on The Motley Fool Australia.

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• These were the worst performing ASX 200 shares last week
• Playing limbo… Magellan (ASX:MFG) share price hits 7-year low
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• 5 ASX 200 shares slumping to 52-week lows on Friday
• This ASX share just halved in price, so why is it time to buy?

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 no position in any of the stocks mentioned. The Motley Fool Australia owns and has recommended Insurance Australia Group Limited. 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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Washington H. Soul Pattinson and Co Ltd (ASX: SOL), or Soul Pattinson, is one of the leading ASX dividend shares.

It has already displayed longevity. The company has been listed on the ASX since 1903. It has survived through world wars, global pandemics, financial crashes and so on.

But that’s old history.

These are three reasons why the company is a very useful ASX dividend share:

Diversified portfolio

Soul Pattinson first started as a pharmacy business.

But now it’s a very diversified investment house. That means it operates by predominantly by investing in other businesses.

It has a portfolio of large and smaller ASX shares.

Some of the biggest holdings are TPG Telecom Ltd (ASX: TPG), Brickworks Limited (ASX: BKW), New Hope Corporation Limited (ASX: NHC), Pengana Capital Group Ltd (ASX:PCG), Tuas Ltd (ASX: TUA), Pengana International Equities Ltd (ASX: PIA), Bank of Queensland Limited (ASX: BOQ), Bki Investment Co Ltd (ASX: BKI), Commonwealth Bank of Australia (ASX: CBA) and Bailador Technology Investments Ltd (ASX: BTI). There are many more.

The company also has a growing portfolio of unlisted and non-ASX shares. Examples of that include the electrical parts business Ampcontrol, Apex Healthcare, financial services, agriculture, swimming schools, resources and luxury retirement living.

Reliable cashflow funds dividends

With a contrarian mindset, Soul Pattinson has designed its portfolio to be defensive. The ASX dividend share says that its portfolio provides “reliable cash through market cycles which serves to protect downside in market corrections.”

Many of the ASX dividend share’s investments pay an annual dividend or distribution to shareholders.

Each year, Soul Pattinson receives all of that cash flow. It pays for its operating expenses and then it pays a large portion of that cash flow out as a dividend to investors. In FY21, it decided to pay 82.3% of its regular operating cash flows as a dividend.

With the bit of retained cash flow, the business invests in more opportunities. The company has a goal of paying steady and growing dividends.

Soul Pattinson has managed to grow its dividend every year since 2000. It has actually paid a dividend every year since it was listed in 1903.

Dividend yield

Soul Pattinson doesn’t have the biggest dividend yield on the ASX. But it does offer a payout that is substantially more than what people can get from a bank savings account.

Based on the trailing dividends, Soul Pattinson has a grossed-up dividend yield of 3.4%.

The post 3 reasons why Soul Pattinson (ASX:SOL) is a strong ASX dividend share idea appeared first on The Motley Fool Australia.

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• Top brokers name 3 ASX shares to sell today
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• Australia’s newest tech unicorn, Zeller, is taking on the ASX banks. Here’s how

Motley Fool contributor Tristan Harrison owns Pengana International Equities Limited and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Bailador Technology Investments Limited, Brickworks, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended Bailador Technology Investments Limited and TPG Telecom Limited. 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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It hasn’t been a great start to the year for growth shares. A number of high flying shares have had their wings singed like Icarus in 2022.

But while that is disappointing, it could also be a buying opportunity for investors. Here’s what analysts are saying about these growth shares:

Life360 Inc (ASX: 360)

The first ASX share to look at is Life360. It is a location-based services provider based in San Francisco, United States with 33 million+ monthly active users. Its shares have lost approximately half of their value since the start of the year.

The team at Bell Potter believe this is a buying opportunity and remain very positive on its long term outlook. So much so, the broker has a buy rating and $10.00 price target on its shares. This is just over double where its shares trade at today.

Bell Potter commented: “Life360 had already pre released most of the key metrics in the 2021 result which were all very strong. These included subscription revenue growth of 48%, total revenue growth of 40%, paying circles growth of 38% and, by our estimation, average revenue per paying circle (ARPPC) growth of 20%. The company ended the year with a cash c.US$94m after adjusting for the Tile acquisition and the only debt is convertible notes of c.US$8m.”

“We have updated each valuation used in the determination of our price target for the forecast changes as well as market movements and time creep. We have also removed the premium in EV/Revenue valuation and increased the WACC in the DCF from 8.4% to 8.7% due to the uncertainty around any impact on Tile and also the potential US listing and any associated raising. The net result is a 26% decrease in our PT to $10.00 which is still a large premium to the share price so we keep the BUY.”

Nitro Software Ltd (ASX: NTO)

Another ASX share to look at is Nitro Software. It is a software company that is aiming to drive digital transformation in organisations around the world. Its key solution is the Nitro Productivity Suite, which provides integrated PDF productivity and electronic signature tools to customers.

Goldman Sachs is very positive on the company and notes that it has a huge total addressable market to grow into in the future. The broker currently has a buy rating and $2.60 price target on its shares. This is almost double the latest Nitro share price of $1.36.

Its analysts commented: “Nitro Software is a global enterprise software challenger in a US$34bn TAM across PDF, e-signing and workflows. Nitro operates in large, underpenetrated markets supported by structural growth tailwinds including remote work, enterprise digitisation and e-signing adoption.”

“We estimate Nitro can increase its TAM penetration from 0.15% to 1.4% by FY40 implying 9x uplift to Nitro’s current revenue base. In our view, this is achievable given (1) Nitro’s core competitive advantages in price, ease-of-use and customer service; (2) strong underlying market growth; and (3) large market opportunity supporting Nitro’s growth in addition to established incumbents.”

The post Analysts see almost 100% upside for these ASX shares appeared first on The Motley Fool Australia.

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• Why Adbri, Appen, Block, and Life360 shares are storming higher
• Back on the horse! ASX tech shares stage stunning comeback following sell-off
• Why is the Life360 (ASX:360) share price jumping 17% today?

Motley Fool contributor James Mickleboro owns Life360, Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Life360, Inc. The Motley Fool Australia has recommended Nitro Software Limited. 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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Are you looking for some exchange traded funds (ETFs) to add to your portfolio this month? If you are, it could be worth taking a closer look at the three ETFs listed below.

Here’s what you need to know about these ETFs right now:

BetaShares Global Energy Companies ETF (ASX: FUEL)

The first ETF to look at is the BetaShares Global Energy Companies ETF. This ETF provides investors with easy access to energy companies that are larger, more geographically diversified, and more vertically integrated than Australian-listed energy companies. Among its holdings are energy giants including BP, Chevron, ExxonMobil, and Royal Dutch Shell. These companies look well-placed to benefit from sky high energy prices.

ETFS Battery Tech & Lithium ETF (ASX: ACDC)

Another ETF for investors to look at is the ETFS Battery Tech & Lithium ETF. Especially after it tumbled to a 52-week low on Friday. This ETF offers investors with exposure to providers of electrochemical storage technology and battery materials/lithium miners. Given how demand for battery materials is rising fast and outpacing supply, the companies included in the fund appear well-placed for growth. Among its holdings you’ll find AMG Advanced Metallurgical Group, Lockheed Martin, and Pilbara Minerals Ltd (ASX: PLS).

VanEck Vectors Australian Banks ETF (ASX: MVB)

A final ETF for investors to look at is the VanEck Vectors Australian Banks ETF. It could be a good option for investors that are wanting exposure to the banking sector but aren’t sure which of the banks to buy. This is because this ETF allows you to own a slice of all the big four banks, the regionals, and also investment bank Macquarie Group Ltd (ASX: MQG) through a single investment. Another positive with this ETF is that it offers an attractive yield. Its 12-month distribution yield currently stands at 5.2%.

The post Here are 3 top ETFs for ASX investors to watch appeared first on The Motley Fool Australia.

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• 3 ASX ETFs hitting 52-week lows on Friday
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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 and has recommended BetaShares Global Energy Companies ETF – Currency Hedged. 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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The Brickworks Limited (ASX: BKW) share price has lots of potential to grow according to the broker Ord Minnett.

Brickworks is one of the older businesses on the ASX. It has operated as one of Australia’s biggest brick manufacturers for decades, and now it is a diverse business.

There are three segments to the business. It has its building products division, ‘investments’ and an industrial property trust.

Building products

Brickworks has operations in both Australia and the US.

In Australia, it is the leading brickmaker with a number of brands such as Austral Bricks. It also makes several other building products including masonry, paving, roofing, precast and so on.

The ASX share did a few acquisitions in the US. It is now the largest brickmaker in the north east of the US. Brickworks has been working on making that segment more efficient to increase profit margins.

Investments

Brickworks has had a cross-holding arrangement with the investment conglomerate Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) for decades. It helped stop corporate raiders.

For decades, Soul Pattinson has helped provide stability and reliable earnings to help offset the cyclicality of the building products division. The growing Soul Pattinson share price has helped the underlying value of the Brickworks share price.

The investment conglomerate has a diverse portfolio with many different businesses including TPG Telecom Ltd (ASX: TPG), Brickworks, New Hope Corporation Limited (ASX: NHC), Pengana Capital Group Ltd (ASX: PCG), agriculture and swimming schools.

Industrial property trust

Ord Minnett recognises that the joint venture with Goodman Group (ASX: GMG) is adding a lot of value for the Brickworks share price.

This trust is where Brickworks sells excess land into the trust for the joint venture to then build high-quality industrial properties on that land. There are some massive buildings going up for both Amazon and Coles Group Ltd (ASX: COL). Another sizeable warehouse is also being built for Woolworths Group Ltd (ASX: WOW).

The Amazon building was due for practical completion at the end of December. This, together with other projects at Oakdale South, will result in significant development profits.

Brickworks says the trust is seeing strong demand and sustained growth in the value of its property trust. COVID-19 has accelerated industry trends towards online shopping and increased the importance of well-located distribution hubs and sophisticated supply chain solutions.

Thanks to the demand, it’s expecting to report record property earnings in the first half of FY22 with property earnings before interest and tax (EBIT) expected to be between $290 million to $310 million.

Brickworks recently released 75 hectares of land at Oakdale East which will extend the development pipeline in the trust.

Brickworks share price target

Ord Minnett has a price target of $26.20 on the business, suggesting a potential upside of more than 20%.

The post Here’s why the Brickworks (ASX:BKW) share price has loads of growth potential: expert appeared first on The Motley Fool Australia.

More reading

• While everyone was focused on growth shares, these ASX value shares have been quietly but significantly gaining over the last 10 years
• 2 ASX dividend shares giving investors steady payrises

Motley Fool contributor Tristan Harrison owns Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns and has recommended Brickworks, COLESGROUP DEF SET, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended TPG Telecom Limited. 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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Unfortunately, it was another week to forget for the Zip Co Ltd (ASX: Z1P) share price and shareholders.

Last week the buy now pay later (BNPL) provider’s shares were the worst performers on the ASX 200 index with a 22.2% decline.

This means the Zip share price is now down 60% since the start of the year and 82% over the last 12 months. It also reduces the Zip market capitalisation down to approximately $1.15 billion.

What happened to the Zip share price?

Investors were selling down the Zip share price last week following the completion of a ~$150 million institutional placement and in response to its plan to acquire BNPL rival Sezzle Inc (ASX: SZL).

In respect to the former, Zip raised the funds at a sizeable 14% discount of $1.90 per new share. Though, even at that level of discount, institutional investors are still under water, with the Zip share price ending the week at $1.72.

As for the latter, the market didn’t react too positively to the proposed all-scrip acquisition of Sezzle Inc (ASX: SZL).

For example, in response to the news, the team at UBS downgraded the company’s shares to a sell rating and cut the price target on them by a massive 80% to a lowly $1.00.

Were the Zip share price to fall to $1.00, it would be the lowest level it has traded at since 2018.

Elsewhere, Macquarie believes Zip might have overpaid for Sezzle and Citi suggested some of the synergy targets could be a little too optimistic.

Glimmer of hope

It is worth pointing out that not everyone is bearish on the acquisition or the Zip share price.

Analysts at Morgans believe the deal makes strategic sense. And while the broker has slashed its price target down to $3.94, this is still more double where its shares currently trade.

Morgans commented: “Clearly, the Sezzle deal makes strategic sense for Z1P. The deal increases both Z1P’s global transaction levels (currently A$7.9bn) and customer base (currently 9.9m) by around ~30-35% respectively. It gives Z1P a materially stronger position in the key US market, with Z1P/Sezzle customer overlap being relatively contained (25%). A stronger product mix and enhance distribution channel mix are other benefits.”

“Clearly the global environment has changed for BNPL operators and for investors it’s now not a space for the faint hearted. We do, however, think the global growth opportunity remains large for companies that can execute in the BNPL space. The scale provided by the acquisition of Sezzle and a more considered growth agenda, could see Z1P be one of those winners, and with Z1P now trading on 2x revenue, we maintain our ADD recommendation,” it concludes.

Time will tell which analysts make the right call.

The post What on earth happened to the Zip (ASX:Z1P) share price last week?! appeared first on The Motley Fool Australia.

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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 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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