Afterpay VS Zip share price: the analyst outlook in focus

We briefly compare Zip and Afterpay’s fiscal 2020 results as well as look at what some analysts are currently saying about the stocks.

BNPL remains the new ‘it’ market

In 2020, Afterpay (APT) and Zip (Z1P) both continued to deliver stellar growth across all of their key operating metrics. Investors, seizing upon a narrative that perhaps sees buy now pay later companies replacing credit cards have bid these stocks to stratospheric heights in response.

Indeed, since 28 July, Zip has seen its share price surge 44%, OpenPay has seen its stock rise 27%, Afterpay has gained 29% and Sezzle has skyrocketed 53%.

With such fervent speculating, the ASX-listed BNPL cohort has come to trade on a set of nose-bleed multiples with potentially even loftier expectations. Some, such as UBS, remain adamant that the market has run well ahead of itself: reiterating their Sell rating and $28.25 price target on Afterpay in the wake of the company’s FY20 release.

Yet such scepticism is few and far between: the market as a whole remains bullish and so do analysts – with APT carrying an Overweight rating, on average, according to the Wall Street Journal.

It’s not hard to see how analysts came to that conclusion – given Afterpay’s growth trajectory – but with the company trading at 46x FY20 sales, according to Bloomberg data, there appears little room for error.

Afterpay share price continues to climb year-to-date

Of course, those critical of Afterpay on valuation grounds, will often be met with an argument along the lines of: ‘the company will grow into its valuation’. Afterpay’s market leading status will also invariably be mentioned.

To be sure, Afterpay’s FY20 results did indeed exhibit its market leading position, with the company, on a year-over-year basis reporting:

  • Underlying sales of $11.1 billion, up 112%
  • 9.9 million active users and 55.4 thousand active merchants
  • Revenue of $519.2 million, up 97% and earnings (EBITDA) of $44.4 million, up 73%
  • A net transaction margin of 2.3%

Ord Minnett analysts bumped up their price target in the wake of this release, from $76.70 to $105.00 and said:

‘APT will continue to benefit from the rapid acceleration in ecommerce as well as the growing appetite for micro instalments as a way for consumers to fund more of their discretionary purchases – at the cost of traditional credit providers, notably credit cards.’

Elsewhere, Morgan Stanley retained their Overweight rating and reaffirmed their $106.00 price target; while Macquarie remained more measured, outlining a $70 price target and Neutral rating for APT.

YTD APT is up 189%

Like Afterpay, momentum remains behind the Zip share price

By comparison to Afterpay, Zip also delivered a strong set of FY20 results, with the company, on a year-over-year basis reporting:

  • Full-year transaction volume of $2.1 billion, up 87%
  • Revenues of $161.0 million, up 91%
  • Cash earnings (EBITDA) of $3.5 million
  • 2.1 million customers and 24,500 partnerships in the Zip ecosystem

Though Zip bears less analysts coverage than Afterpay, RBC analysts reaffirmed their Outperform rating and price target (PT) of $7.00 per share on the stock, while arguing:

‘Improved momentum in QuadPay and increasing success in onboarding larger enterprise merchants is a positive, in addition to the Zip Biz update, as Zip partners with eBay, Zip gains access to a sizable customer base and secures U$100m debt funding to grow the segment.’

Elsewhere, Shaw & Partners currently has a Buy rating and $10.00 price target on Zip.

YTD Zip is up 150%.

What are your thoughts on Afterpay and Zip...

Are you bullish or bearish on the BNPL sector? Whatever your view, you can use CFDs to trade both rising and falling markets, through IG’s world-class trading platform now.

For example, to buy (long) or sell (short) Afterpay using CFDs, follow these easy steps:

  • Create an IG Trading Account or log in to your existing account
  • Enter 'Afterpay' in the search bar and select it
  • Choose your position size
  • Click on ‘buy’ or ‘sell’ in the deal ticket
  • Confirm the trade

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

Please see important Research Disclaimer.

Seize a share opportunity today

Go long or short on thousands of international stocks.

  • Increase your market exposure with leverage
  • Get spreads from just 0.1% on major global shares
  • Trade CFDs straight into order books with direct market access

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.


Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.