Zip Co Ltd (ASX: ZIP) shares have endured a bruising year, but brokers remain confident the sell-off may have gone too far.
After trading between $1.38 and $4.93 over the past 12 months, the ASX buy now, pay later stock faces several potential catalysts, including continued growth in its lucrative US market.
A broader technology sell-off, concerns about competition and slowing growth, geopolitical uncertainty and higher-for-longer interest rates have all weighed on investor sentiment.
But with Zip's underlying financial performance strengthening, brokers remain remarkably bullish.
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Brokers see big upside for Zip shares
TradingView data shows all 12 analysts covering Zip shares currently have either a buy or strong buy rating. The average broker price target of $4.56 implies potential upside of around 95% from the current share price of $2.35 at the time of writing.
The most bullish forecast is even more eye-catching, with one broker tipping Zip shares to reach $6.03. This points to a potential 157% return over the next 12 months.
UBS recently reiterated its buy rating and $4.70 price target, implying roughly 100% upside from the current share price. The broker said Zip's current-year outlook was better than expected, providing greater confidence in the defensive qualities of its BNPL model during weaker economic conditions.
Why could Zip shares rebound?
Zip's recent financial performance provides some substance behind the bullish broker forecasts for Zip shares. Its latest FY26 results showed cash EBTDA jumping 57.9%, while revenue rose 24.7% and NPAT increased 45.7%.
Management expects that momentum to continue, forecasting cash EBTDA growth of around 26% in FY27 as the business benefits from further growth and scale.
Perhaps the most important part of the story is where that growth is coming from. Zip has spent the past few years reshaping the business around product development, profitability and international expansion, with the US now firmly at the centre of its strategy.
The US accounted for roughly two-thirds of Zip's revenue in FY26. Revenue from the market climbed 37.3% in Australian dollar terms and 44.3% in US dollar terms, comfortably ahead of the 4.6% growth recorded across ANZ.
Customer numbers tell a similar story. Active US customers increased 9.3% to 4.65 million, while ANZ customers declined 8% to 1.88 million. Zip expects US total transaction value to grow by more than 30% in FY27.
That makes the US expansion arguably the biggest potential driver of Zip's earnings and valuation from here.
Could a Nasdaq listing provide another catalyst?
Zip is also pursuing a dual listing on the Nasdaq. A US listing could increase the company's visibility among American investors and potentially support its ambitions in the world's largest BNPL market.
For investors in Zip shares, that creates an intriguing setup: a share price that has fallen sharply, accelerating earnings growth, strong broker support and a potentially significant US opportunity.
Of course, the risks haven't disappeared. Zip remains exposed to consumer spending, competition, regulation and interest rates, while its aggressive US expansion will need to keep delivering.
