UBS analyst Lucy Huang maintains a positive outlook on Zip Co, despite recent regulatory challenges in the United States. Zip, a buy now, pay later provider, has experienced a 36 per cent share price decline since October, influenced by inquiries from seven US state attorneys general and former President Donald Trump’s proposal for a 10 per cent credit card rate cap. Huang believes that if the rate caps are not implemented, Zip’s underlying fundamentals will remain strong, presenting an appealing investment opportunity.
Strong performance during the Black Friday sales period has bolstered growth projections for the company. UBS forecasts a 34 per cent increase in Group Total Transaction Volume (TTV) for the second quarter of 2026. This growth is expected to be primarily driven by a 46 per cent increase in the US market and a 9 per cent rise in Australia and New Zealand (ANZ). The company anticipates net bad debts to stabilise at 1.63 per cent in the first half of 2026.
According to UBS, Zip’s portfolio income for the first half of 2026 is projected to reach $669 million, with cash EBITDA expected to be $128 million. Despite these positive forecasts, UBS has slightly reduced its price target for Zip by 4 per cent to $5.20 per share, based on a discounted cash flow (DCF) valuation. Zip provides point-of-sale credit and digital payment services to consumers and merchants.
