It has been a very disappointing week for the Zip Co Ltd (ASX: Z1P) share price.
Although the buy now pay later (BNPL) provider's shares are pushing higher today, they are still down 8% this week.
Things are even worse if you stretch the timeframe out to a month. Since this time in April, the Zip share price has lost 30% of its value.
Is the weakness in the Zip share price a buying opportunity?
According to a note out of Shaw and Partners this week, its analysts believe the weakness in the Zip share price is a buying opportunity.
The broker currently has a buy rating and lofty $16.00 price target on its shares.
Based on the current Zip share price of $6.73, this implies potential upside of almost 140% over the next 12 months.
What did the broker say?
Shaw and Partners believes that valuation support is emerging for BNPL shares. Particularly given that further growth catalysts are on the horizon.
It notes that more than 10% of Americans have now used a BNPL product. However, the average spend is much higher than in the Australian market at the same period after launch. Looking ahead, it appears confident the positive trends will continue in the United States. Especially given COVID-19 stimulus checks, offline launches, and the growing presence of BNPL options at checkouts.
In addition to this, last month the broker became even more bullish on Zip following the release of its third quarter update. The highlight for its analysts was the performance of the company's app. Shaw and Partners believes the market is under-appreciating the viral effect of its Zip's pay-anywhere functionality. It also sees opportunities for Zip to expand its offering into the cryptocurrency market, shares, and lending.
It isn't just the Zip that Shaw and Partners is bullish on. As well as Zip, the broker has a buy (high risk) rating and $4.00 price target on Openpay Group Ltd (ASX: OPY) shares. This compares to the latest Openpay share price of $1.76.
