Price Target $4.91

Shaw & Partners have issued a new price target this morning - $4.91

PDF: Z1P_20200228.pdf

Zip Co (Z1P)

Rating: Buy | Risk: High | Price Target: $4.91

Better to Own a Small Part of a Big Business, Particularly at a 40% Discount to Closest Peer

Event: Zip 1H20 Results. Overall the company’s 1H20 results were in line with Shaw expectations due to the pre-release of various drivers with the only new news being Cash EBTDA, with the company flagging further growth investment to get ahead of international and new products. This shouldn’t be unexpected however is a negative catalyst against a volatile market. Recall that AMZN have an option to acquire Z1P stock at a materially higher $4.70 exercise price upon hitting various hurdles and WBC is a major shareholder.

Recommendation: Zip should have a big 2H20 which is catalyst rich. Tactically the announcement today was always likely to have costs higher and the quarterly took the above expectation growth numbers (previously) out as a catalyst. 2H20 according to the company should see 700k customers added, UK launched, Zip Biz going big, big merchants added, strategic partners signed and a step change in growth to flow in FY21. Re-iterate Buy recommendation.