The Afterpay Touch Group Ltd (ASX: APT) share price ended the day 13.3% higher thanks to two very positive bits of news for the buy now, pay later operator.
Broker Goldman Sachs set a $42.90 price target for Afterpay and upgraded its shares from a neutral rating to a buy rating.
The amount of returning customers in the US and the UK impressed Goldman, so if customers in the US and UK follow the same pattern as ANZ users then Afterpay could be onto a winner with lower default rates and higher operating leverage.
Based on the positives, Goldman thinks Afterpay could hit gross merchandise volume (GMV) of $29.2 billion in FY22 and a higher net transaction profit margin.
On the AUSTRAC side of things, Afterpay provided an update about the anti money laundering and counter terrorism funding matters.
The interim report by Mr Neil Jeans has been given to AUSTRAC, which doesn't include any recommendations – those will be left to the final report.
Afterpay said it has not identified any money laundering or terrorism financing activity via its systems to date.
The BNPL company said, "Afterpay recognises the important work undertaken by AUSTRAC. The Company reiterates that it welcomes the opportunity to continue to work cooperatively with AUSTRAC and will approach this formal process as an opportunity to ensure that our AML/CTF compliance is robust."
Another update will be provided to the market after the final report has been given to AUSTRAC.
Foolish takeaway
Using Goldman Sachs' estimate of earnings per share (EPS) of 71 cents per share, it's trading at 51x FY22's estimated earnings.
