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Positives about Zip shares

The company certainly looks cheaper after its sell-off from several months ago, but the overall numbers continue to be very positive.

In the FY25 third quarter, cash operating profit (EBTDA) surged 219.4% year over year, total transaction value (TTV) increased 35.7% to $3.3 billion, total income increased 26.5% to $278.9 million, the net bad debts improved to 1.6% of TTV (from 1.7% a year ago) and active customers increased 4.2% to 6.3 million.

The broker UBS is forecasting that Zip could grow earnings at a compound annual growth rate (CAGR) of 30% between FY25 to FY27 and it thinks the macroeconomic risks are "largely priced in at these levels".

UBS currently has a buy rating on Zip shares, with a price target of $3.20. A price target is where the broker thinks the Zip share price could be in a year from the time of the investment call. That price target suggests a potential rise of 62% from its current level.

According to the broker's forecast, the Zip share price is valued at 60x FY26's estimated earnings and 14x FY29's estimated earnings.