The Afterpay Touch Group Ltd (ASX: APT) share price returned to trade from its trading halt on Friday with a bang.
In morning trade the payment technology company's shares were up as much as 24% to an all time high of $23.00. They have since given back a good portion of these gains, but still sit higher by almost 5.5% to $19.55 at the time of writing.
Why did Afterpay Touch's shares rocket higher today?
Investors were fighting to get hold of the company's shares after its announced plans to expand into the UK market.
To do this the company plans to acquire a 90% interest in UK-based buy now, pay later business Clearpay for a total consideration of 1 million Afterpay Touch shares.
Although the company's acquisition is all scrip, it still needs funds to support its expansion. Pleasingly the company has had no issue raising money and announced this morning that it successfully raised $117 million via an institutional placement at $17.05 per share. This was the high end of its placement range.
Is it too late to invest?
I don't believe it is and feel the company's decision to enter the UK market is a smart one. After all, the UK market is the world's third largest e-commerce market with more than £133 billion in online retail sales per annum.
Although its expansion isn't going to have a material impact on its first half results due to timings, it could contribute to its second half and full year result and lead to even quicker than expected growth.
In light of this, I don't think it is too late to invest in Afterpay Touch and I'm not alone in thinking this way.
According to a note out of Goldman Sachs this morning, the broker has reiterated its buy rating and added the company to its conviction list. Goldman has lifted its price target on Afterpay Touch's shares from $11.15 to a massive $27.15. This price target implies potential upside of around 39% for its shares over the next 12 months.
Although the broker only expects earnings per share of 3 cents this year due to increased start up costs, it has forecast earnings growing to 25 cents per share in FY 2020 and then 69 cents per share in FY 2021. This means that Afterpay Touch's shares are trading at 78x FY 2020 earnings and 28x FY 2021 earnings.
