Morningstar initiates coverage on Australia's Zip Co; says shares modestly overvalued

Zip Co

05/11/2025 03:41

** Morningstar initiates coverage on buy now, pay later firm Zip co ZIP.AX  with fair value estimate of A$3.50 per share

** Assigns co 'Very High Uncertainty' rating, says shares are currently modestly overvalued

** Sees cash EBITDA margins expanding to 23% by FY2035, from 16% in FY2025
** Expects co to scale up fast in the U.S. but anticipates firm competition from smaller rivals in Australia
** 7 of 8 analysts rate the stock "buy" or higher, 1 "hold"; their median PT is A$4.5 – according to data compiled by LSEG
** ZIP down 3.4% in current session; YTD, up 26.5%

 (Reporting by Jasmeen Ara Shaikh in Bengaluru)

 ((Jasmeenaraislam.shaikh@thomsonreuters.com))