Zip Shares Deliver Year of Two Halves: Bullish Analyst Emerges To Boost Sentiment

Zip Co shares (ASX:ZIP) are trading at A$3.10, having climbed 4.3% through the first week of the new financial year. This has pushed shares into positive territory on a rolling 12 month basis, with ZIP now 3.68% up on the year, as the buy-now-pay-later provider transitions from speculative fintech to profitable growth story.

With Zip shares having added 23% over the past month, momentum may well be shifting, with US brokerage B. Riley also initiating coverage with a Buy rating and A$4.70 price target. The target implies a little over 50% upside if the analyst’s thesis plays out.

A New Bull on Wall Street

B. Riley analyst Hal Goetsch told investors in a research note that Zip enjoys high growth potential as it participates in the rapid adoption of buy-now-pay-later, which he characterised as the fintech industry’s top payment innovation of the past decade. The analyst’s bullish stance centres on Zip’s ability to grow at a high rate with very low marginal cost growth, a dynamic expected to produce strong margin expansion as the platform scales.

The initiation arrives on the back of record third-quarter FY26 results that saw Zip deliver cash EBTDA of approximately A$65.1 million, up 41–42% year-on-year, with operating margins expanding to roughly 19–20%. Strong performance in both the US and Australia-New Zealand markets drove the result, prompting management to lift full-year FY26 cash EBTDA guidance to around A$260 million from a prior target closer to A$240 million. The upgrade reinforced the company’s narrative that it is now scaling profitably rather than simply chasing growth at any cost, with tight cost control and improving unit economics—particularly in the US book—underpinning the performance.

Zip has also secured strategic wins that support the growth-at-scale thesis. The company recently announced an expanded partnership with payments giant Stripe, under which Zip US will support Stripe’s Shared Payment Token to extend flexible payment solutions into AI-enabled and embedded commerce experiences. The deal is intended to increase Zip’s merchant reach and transaction volumes across the Stripe ecosystem, helping shift the company’s profile from an Australian BNPL player with US ambitions to a more genuinely global operator with the US now a leading earnings driver.

Price Targets

The current A$3.10 level fir Zip shares sits materially below the newly established B. Riley target but broadly in line with consensus broker targets averaging A$3.70–3.80 across approximately eight to eleven analysts covering the stock. The shares had previously jumped 20–25% intraday following the company’s April quarterly update, closing up roughly 13–14% that session around A$2.30 as markets digested a significant earnings beat and upgraded guidance.

The B. Riley initiation adds to an already bullish broker backdrop, with consensus ratings currently sitting around “Strong Buy” and the newly established A$4.70 target representing the high end of the range. The call leans heavily on continuation of BNPL adoption and benign credit conditions, with the low-marginal-cost growth model expected to drive operating leverage as incremental customers and volumes flow through without proportionate cost increases.

However, not all analysts share the enthusiasm. Jefferies downgraded Zip to Underperform earlier in the re-rating cycle despite a mid-year trading update that had upgraded FY25 cash EBTDA guidance, flagging concerns about US customer growth and cash EBTDA relative to consensus. The broker noted that after a sharp share price rally and guidance upgrades, Zip was trading at a premium to both Australian and US BNPL peers on enterprise value-to-sales and enterprise value-to-EBITDA metrics, raising questions about valuation support if growth disappoints.

What Next For Zip?

Markets are now pricing in sustained high growth combined with rising margins, leaving the stock vulnerable to outsized downside if the next couple of quarters stumble, whether through higher loss rates, weaker US momentum, or a deterioration in credit conditions. The BNPL sector remains intensely competitive, with Zip facing well-capitalised rivals including Afterpay owner Block, Klarna, PayPal, and Apple, all of which have rolled out or are developing competing payment features.

After a bumpy start to 2026, that has seen ZIP fall back 55% through the first three months, then rebound 108% from that level, holders will be pleased to see another bull added to the analyst deck. But it will take more than price targets to keep momentum going, and the fundamentals will need to deliver if a push back towards 2025’s highs is a target.