The Zip Co Ltd (ASX: ZIP) share price has soared 90% in the past year. However, just because a business has soared doesn't mean it can't continue climbing.
The buy now, pay later business has seen the market go from very positive to negative to more positive in the last few months, as the chart below shows. The uncertainty surrounding tariffs were part of the problem, of course.
The key question is – should investors be interested in the Zip share price now or has it gone as far as it can (for now)?
Let's take a look at what the broker UBS thinks.
Image source: Getty Images
Bullish view on Zip shares
The broker noted that earlier in June, the business upgraded its cash operating profit (EBTDA) expectations to at least $160 million, an upgrade of 5% compared to the prior guidance of $153 million, thanks to strong US performance.
Both April and May 2025 saw US dollar total transaction value (TTV) growth of more than 40%, which was stronger than the market had expected.
UBS noted that strong growth and credit performance have been reported across the board by US buy now, pay later players in recent quarterly performances.
The broker was impressed by how Zip has accelerated US customer growth, while the credit loss performance remains unchanged.
UBS suggested the business has room to invest more in marketing in the US to generate stronger net new customer growth from here, supporting its medium-term top-line outlook.
Analysts think the earnings momentum story is "well and truly intact". Despite that, the Zip share price is still approximately 20% lower than it was at the end of 2024.
Due to Zip's strong growth outlook, operating leverage potential and conservatism in its forecasts, UBS thinks the valuation is still attractive, so the broker still has a buy rating on the business.
Forecasts for the buy now, pay later stock
In FY26, UBS is projecting that Zip could generate $1.26 billion of revenue, $55 million of operating profit (EBIT) and $38 million of net profit.
The broker has a price target of $3.40 on the business, implying a possible rise of 25% over the next year, from where it is today.
Overall, this seems like a promising time to look at the business, particularly if it's able to increase its profit margins while growing revenue over the longer-term.
