Should you buy Zip shares and sell NextDC shares?

Let's see what one analyst is saying about these popular shares.

| More on:
A young man goes over his finances and investment portfolio at home.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Two popular ASX shares that feature in countless portfolios are data centre operator Nextdc Ltd (ASX: NXT) and buy now pay later (BNPL) provider Zip Co Ltd (ASX: ZIP).

But according to one analyst, only one of these shares is in the buy zone right now.

Let's see what DP Wealth Advisory is saying about these shares, courtesy of The Bull.

Zip shares

DP Wealth Advisory is feeling bullish about this BNPL provider and appears to believe its shares can keep rising. This is despite Zip shares climbing more than 70% over the past 12 months.

The wealth advisor has named Zip as a buy due largely to its opportunity in the massive United States market. It explains:

Despite the strong share price performance during the past 12 months, there's still much to like about Zip, in particular the significant opportunity in the buy now, pay later (BNPL) space in the US. The BNPL market in the US is quite immature relative to Australia or Europe. With 6 million active clients and 83,000 merchants processing 88 million transactions to the value of about $12 billion, it wasn't surprising the business provided an earnings upgrade in June. ZIP is holding more than $400 million in cash and bad and doubtful debts are low at 1.6 per cent. Investors should expect volatility, so the stock should be considered higher risk.

NextDC shares

Another ASX share that DP Wealth Advisory has given its verdict on is NextDC. But unlike Zip shares, the wealth advisor isn't feeling bullish about this data centre operator and has labelled it as a sell.

It has concerns over the capital intensity of its business model. It explains:

NXT operates a network of data centres. The stock has appealed to some investors on demand for artificial intelligence. However, past capital raisings to fund expansion diluted the stock. The company recently announced it had increased its debt facilities to $5.1 billion, after entering into a binding agreement for a new $2.2 billion debt funding package to accelerate growth. I remain cautious about the company's outlook given the capital hungry nature of its business.

Though, it is worth noting that a large number of brokers rate NextDC shares as a buy.

For example, Morgans has a buy rating and $18.80 price target, UBS has a buy rating and $20.20 price target, Morgan Stanley has an overweight rating and $20.50 price target, and Macquaire has an outperform rating and $22.10 price target. These price targets imply potential upside of 30% to 50%.

Motley Fool contributor James Mickleboro has positions in Nextdc. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Zip Co. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Broker Notes

Keyboard button with the word sell on it, symbolising the time being right to sell ASX stocks.
Resources Shares

ASX 200 materials was the best sector of 2025 but it's time to sell these 3 shares: broker

Morgan Stanley has just updated its ratings and 12-month price targets on 3 ASX 200 mining shares.

Read more »

Man putting in a coin in a coin jar with piles of coins next to it.
Broker Notes

Two ASX penny stocks Bell Potter thinks are worth watching in 2026

Bell Potter is tipping upside on these penny stocks.

Read more »

A financial expert or broker looks worried as he checks out a graph showing market volatility.
Broker Notes

Leading brokers name 3 ASX shares to buy today

Here's why brokers believe that now could be the time to buy these shares.

Read more »

Overjoyed man celebrating success with yes gesture after getting some good news on mobile.
Broker Notes

Why Bell Potter just upgraded this ASX All Ords share to a buy rating

The broker has turned bullish on this growing company. Here's what you need to know.

Read more »

A female broker in a red jacket whispers in the ear of a man who has a surprised look on his face as she explains which two ASX 200 shares should do well in today's volatile climate
Broker Notes

Bell Potter says these ASX shares are best buys in January

The broker has good things to say about these shares.

Read more »

Broker written in white with a man drawing a yellow underline.
Broker Notes

Top brokers name 3 ASX shares to buy next week

Brokers gave buy ratings to these ASX shares last week. Why are they bullish?

Read more »

A group of people push and shove through the doors of a store, trying to beat the crowd.
Broker Notes

2 ASX shares highly recommended to buy: Experts

Are these two stocks the best buys on the ASX?

Read more »

Smiling couple sitting on a couch with laptops fist pump each other.
Broker Notes

These ASX 200 shares could rise 20% to 55%

Brokers have good things to say about these shares.

Read more »