National Australia Bank Ltd (ASX: NAB) shares have gained 36% in value over 12 months and 11% in 2026.
Most brokers believe the $143 billion banking giant is trading above fair value at its current share price of $46.82.
As such, investors might want to shift their focus to a smaller ASX fintech stock: Zip Co Ltd (ASX: ZIP). The buy now pay later (BNPL) provider finished last week with a 3.7% rise to $1.85.
More importantly, brokers tip explosive upside for this BNPL stock, while downside appears more likely for NAB shares. Let's find out why.
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Profitable growth is finally arriving
The ASX growth stock is now delivering the kind of results investors have been waiting for. Over the past few years, the company has deliberately shifted away from a 'growth at any cost' strategy and focused on expanding while improving profitability. That change is now showing up clearly in the numbers.
In its latest half-year results, the company delivered record cash EBITDA of $124.3 million, jumping 85.6% compared to the previous year. Total income rose 29% to $664 million, while total transaction volume climbed 34% to $8.4 billion.
Just as importantly, bad debts remain well controlled at around 1.7% of transaction volume. That suggests the company is successfully managing credit risk even as it continues to grow its lending book.
For investors who previously questioned the business model's sustainability, the rapid improvement in profitability marks a major turning point.
Expansion runway in the US
The US business is now driving Zip's growth story. Transaction volumes, revenue and customer engagement are all rising as the platform signs new merchants and rolls out additional payment products.
The US market already generates the majority of the company's earnings, and growth there continues at a strong pace. Analysts note the business is benefiting from rising consumer demand for flexible payment options and partnerships with large merchants.
If the company continues to build momentum in the world's largest consumer market, its long-term growth opportunity could be significantly larger than the Australian buy now, pay later market alone.
What next for Zip and NAB shares?
The ASX growth stock has lost significant ground recently. Although Zip shares closed 14% higher on Thursday and Friday, they are still down 44% year to date.
That sharp decline has caught the attention of analysts. Most brokers now rate the stock as a strong buy, reflecting confidence in the company's improving profitability and expanding US business.
According to analyst estimates, the Zip stock has an average 12-month price target of about $4.21. Forecasts range from roughly $3.35 to $5.27. From current trading levels, that suggests potential upside of around 82% to 186%.
Brokers are a lot less enthusiastic about NAB shares. Despite delivering a solid quarterly update, Morgans believes NAB's shares are overvalued at current levels. The broker just placed a sell rating on the big four banks' shares with a price target of $37.27.
This suggests a potential downside of 20.3% for investors at current levels. The most bearish analyst sees the maximum downside at 36%, while the most optimistic broker predicts an 8% upside for NAB shares.
