'Things look very tight' at Australia's Zip with lower growth ahead - Jefferies

Openpay

01/07/2022 24:32

** Jefferies says the buy now, pay later co Zip  ZIP.AX  has
enough funding to last until FY25, but "things look very tight"
if the company does not reach profitability by then
    ** Jefferies cuts PT to A$0.38 from A$1.00; maintains
"underperform" rating 
    ** BNPL stocks have taken a hit on reduced consumer
spending, rising interest rates and trickier credit conditions
raising the prospect of consolidation in the sector  urn:newsml:reuters.com:*:nL8N2XV4A5
    ** Brokerage sees complexity in co's buyout of Sezzle
 SZL.AX , citing bearish U.S consumer sentiment and rising
funding costs 
    ** There are risks ZIP may need to raise additional funding
to repay some of its funding facilities maturing in 12 months -
brokerage 
    ** Given the significant decline in its share price, ZIP
could potentially be an acquisition target and a buyer would
need to shell out at least $1 bln - Jefferies 
    ** ZIP shares have shed 99%, or A$3.91 bln ($2.70 bln), in
market value in the past year 
    ** Jefferies also expects lower levels of growth ahead after
ZIP put its UK business under review and cut its investments in
its Rest of the World arm
    ** Two of eight analysts rate the stock "buy" or higher, one
"hold" and five "sell" or lower; their median PT is A$1.02–
Refinitiv Eikon data 
    ** Stock is down nearly 90% so far this year, as of last
close 
    

($1 = 1.4484 Australian dollars)

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Zip Shares Tank    https://tmsnrt.rs/3AbFR2O
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 (Reporting by Navya Mittal in Bengaluru)
 ((navya.mittal@thomsonreuters.com))