The Afterpay Touch Group Ltd (ASX: APT) share price rocketed 13% to $36.10 yesterday on the back of news that the analysts at Goldman Sachs tipped the stock to hit $42.90 within the next 12 months. Goldman's is basing its valuation on Afterpay earning 30 cents per share in fiscal 2021 and 71 cents per share in fiscal 2022.
In fiscal 2019 Afterpay earned revenue of $272.5 million and Goldman's earnings per share estimates are based on it reaching $891.6 million in revenue in fiscal 2021 and $1,393.2 million by fiscal 2022.
As such we can see Goldman's is relying on Afterpay delivering some blockbuster growth in the US and UK, despite the buy-now-pay-later market getting increasingly competitive.
In Australia for example Afterpay's growth is likely to slow and an economic downturn could lead to less spending among its core client base.
Still another popular Australian research house in Bell Potter is nearly as bullish as Goldman's on Afterpay. Today Bell Potter lifted its 12-month price target on Afterpay to $41.61 a share. If it's on the money then Afterpay shares have around 15% upside in the year ahead.
Other competitors in the space include Z1P Co. Ltd (ASX: Z1p) and Splitit Ltd (ASX: SPT).
