If you're an owner of Zip Co Ltd (ASX: Z1P) shares, you might be wondering what is expected from the company in the coming years.
In light of this, I've taken a look at a recent note out of Citi to see what its analysts are forecasting.
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What is expected from Zip?
If you were hoping that Zip would be profitable in the near future, you may be disappointed to learn that Citi is expecting losses for the foreseeable future.
Its analysts have recently made a material cut to their earnings forecasts for Zip to reflect slower growth in the United States.
According to the note, the broker expects Zip's losses to widen from $211 million in FY 2021 to $218 million in FY 2022. After which, Citi is forecasting the company's losses to lessen to $171 million in FY 2023 and then $103 million in FY 2024.
Are Zip's shares in the buy zone?
In light of the above, Citi isn't recommending investors rush in to buy Zip's shares just yet. It has put a neutral rating and $5.85 price target on its shares.
Though, due to recent weakness in the Zip share price, this price target implies potential upside of 50% for investors over the next 12 months. Which isn't bad for a neutral rating!
Citi commented: "Zip's US growth is slowing faster than expected. We lower our Zip TTV forecasts by -10% to -13% and make material cuts to our earnings forecasts, which primarily reflects slower than expected growth in the US. While the Zip share price has underperformed recently, given weaker than expected trends in spite of a step-up in marketing spend we maintain our Neutral rating and lower our target price by -23% to $5.85."
