The Afterpay Touch Group Ltd (ASX: APT) share price has built on yesterday’s stellar gain with another impressive push higher on Friday.
In morning trade the fintech company’s shares are up a further 13% to $15.26.
Incredibly, at one stage Afterpay Touch’s shares were up almost 20% to an all-time high $16.19.
Why has Afterpay Touch surged higher today?
On Thursday Afterpay Touch wowed the market with a business update which revealed a total of $2.18 billion in underlying sales processed through the Afterpay platform in FY 2018. This was a massive 289% increase on FY 2017.
This strong performance means the company expects to report revenue of $142 million and EBITDA between $33 million and $34 million in FY 2018. Afterpay Touch’s “EBTDA” is expected to be in the order of $27 million to $28 million.
Was this a strong result?
In one word, yes. One of the more bullish brokers out there has been Goldman Sachs. A note out of the investment bank last month revealed that it was expecting underlying sales of $2.093 billion, revenue of $134.6 million, and EBTDA of $24.5 million. Afterpay Touch smashed its forecasts.
While Goldman hasn’t yet revised its buy recommendation or price target of $11.15, one broker that has been quick to respond to the result is Bell Potter.
A note out of the broker reveals that it has retained its buy rating and doubled its price target from $10.41 all the way up to $21.00.
Following the update the broker has upgraded its earnings per share estimates for FY 2019 and FY 2020 to 13.3 cents and 25.3 cents, respectively.
Bell Potter appears to be pleased with the company’s strong start to life in the U.S. and believes it “has only begun to scratch the surface of opportunities” in the lucrative market.
Should you invest?
While its shares are certainly looking expensive now, I do agree that they could be a buy. However, I would only recommend an investment if you have a high tolerance for risk and are prepared to buy and hold for the long-term.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO and Bravura Solutions Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.