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Top broker slaps buy rating on Zip Co shares

James Mickleboro
ASX broker upgrade

The Zip Co Ltd (ASX: Z1P) share price was a very strong performer on Thursday.

The payments company’s shares rocketed as much as 20% higher following the release of a positive announcement.

What did Zip Co announce?

On Thursday Zip Co announced a strategic agreement with Amazon Australia.

This agreement sees Zip immediately become a payment option for customers shopping on Amazon.com.au. It also means that it is Amazon’s first Australian instalment payment option.

Zip CEO and Managing Director, Larry Diamond, said: “We are thrilled to have secured this strategic agreement with Amazon Australia, providing customers with a more flexible way to pay. This agreement puts Zip firmly on the main stage by allowing customers shopping on Amazon.com.au to use Zip to pay at their pace. The agreement delivers a fantastic experience for customers who are looking to own the way they pay.”

Is it too late to invest?

One leading broker doesn’t believe it is too late to buy Zip Co’s shares.

According to a note out of UBS, its analysts have taken their sell rating off its shares. Furthermore, they have upgraded their rating all the way up to a buy.

The broker has a price target of $4.80 on its shares, which implies potential upside of approximately 21% over the next 12 months.

It prefers Zip Co to rival Afterpay Touch Group Ltd (ASX: APT), which it is famously very bearish on. This is due to its belief that Zip Co has less exposure to the risks associated with the buy now pay later model.

However, one broker which isn’t as positive is Morgans. Although it appears to be a fan of the company and sees this Amazon deal as a positive, it retains its hold rating on valuation grounds. It notes that Zip Co’s shares have quadrupled in value this year.

The post Top broker slaps buy rating on Zip Co shares appeared first on Motley Fool Australia.

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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO and ZIPCOLTD FPO. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2019