Zip Co Ltd (ZIP.AU) saw its stock price plummet by 5.61% in Wednesday's trading session, following a bearish report from Jefferies. The sharp decline comes as investors react to concerns about the buy-now-pay-later company's future earnings potential.
Jefferies analysts have downgraded Zip's stock from hold to underperform, citing expectations that the company's fiscal year 2026 earnings guidance is likely to fall short of market expectations. The investment bank's analysts believe that consensus forecasts for U.S. customer growth and group earnings are overly optimistic.
Adding to the negative sentiment, Jefferies revealed that their survey of 1,000 U.S. customers indicated Zip has the weakest brand momentum among buy-now-pay-later operators. Despite raising their target price by 17% to A$2.10, Jefferies' fiscal year 2026 earnings forecast for Zip is 9% lower than the analysts' average. This downgrade and pessimistic outlook have clearly spooked investors, leading to the significant sell-off in Zip's shares.
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