Citi says Zip has addressed fraud issue, notes stronger transaction growth

** Citi said Zip Co ZIP.AX has addressed a coordinated fraud issue that weighed on Q1 performance and noted accelerated transaction volume growth in September

** Says total transaction value growth improved to 41% y/y in September from about 30% growth in July and August, with momentum continuing into October

** Notes tighter risk settings implemented to combat fraud affected both existing customer spending and new customer sign-ups

** Says the A$10 million increase in bad debts reflected a coordinated fraud ring using valid customer credentials rather than a deterioration in US consumer health

** Expects co's guidance to be supported by stronger US transaction growth, solid ANZ performance and cost flexibility

** Citi maintains a "buy" rating and an unchanged A$3.30 target price

** YTD, stock down 55.6%, as of last close