Citi sees increased medium-term risk to Zip Co's U.S. business from Square-Afterpay deal
02/08/2021 22:34
** Citi sees mixed implications for buy now, pay later firm
Zip Co Z1P.AX after U.S.-based Square's SQ.N $29 billion
takeover of peer and BNPL giant Afterpay APT.AX
** Says while APT buyout increases takeover appeal for Zip,
co is at a medium-term risk from lack of scale internationally,
especially its U.S. offering, Quadpay
** Adds it is positive on the near-term outlook for Zip
given the growth potential of Quadpay
** Our view is that Quadpay's revenue yield is
unsustainable. Zip could potentially reduce the scale gap by
partnering - Citi
** Square on Monday said it has agreed to purchase Afterpay,
offering a 30% premium in a share-swap deal that is set to be
Australia's biggest-ever buyout urn:newsml:reuters.com:*:nL1N2P80L9
** APT closed 18.8% higher on Monday, biggest ASX 200 gainer
.AXJO
** Eleven of 15 analysts rate Zip "buy" or higher, 2 "hold"
and 2 "sell" or lower; their median PT is A$136.5– Refinitiv
data
** Stock down 2.7% this year, as of last close
(Reporting by Savyata Mishra in Bengaluru)
((Savyata.mishra@thomsonreuters.com))