43 MINUTES AGO | 3.20PMZip offers cheapest BNPL exposure:...

43 MINUTES AGO | 3.20PMZip offers cheapest BNPL exposure: Shaw

Zip Co is the clear number two BNPL player to Afterpay, says Shaw and Partners as it tips the group’s US investment QuadPay to accelerate its growth in the year ahead.

While the year just passed has been massive for the sector, analyst Jonathon Higgins forecasts FY21 to be even stronger.

“We see the Zip share price as having reduced on Quad’s relative transaction value underperformance between other BNPL companies in Q4-20 on Q3-20,” he writes.

“This is to be expected however with Quad unlisted, with lesser access to capital, COVID generating conservatism and in the midst of acquisition by Zip.

He notes that app download data for the service is 40pc above COVID-19 lows in June, and the group is likely to accelerate customer acquisitions and volumes under Zips ownership.

The broker expects Quad to end the current year with 3.4 million customers, delivering $19bn in sales volumes and annualising $160m in revenue.

“We expect Zip to advise of aspirational goals at the results in late August a potential catalyst alongside further Quad data and acceleration in a COVID world, with the company regularly beating expectations and in the midst of one of the greatest structural changes in

financial services,” Mr Higgins says.

“We upgrade our PT from $6.25 to $7.03, with Zip representing the cheapest sector exposure and being a clear number 2 with the USA coming and Quad growing faster than APT and Z1P at comparable periods.”

Z1P shares last down 1.7pc to $5.84 - a 19.3pc loss for the week