The Afterpay Touch Group Ltd (ASX: APT) share price has been amongst the best performers on the ASX 200 on Monday.
At the time of writing the payments company’s shares are up just over 5% to $28.36.
This makes Afterpay the second-best performer on the index behind Elders Ltd (ASX: ELD).
Why is the Afterpay share price racing higher?
Investors have been buying the payments company’s shares on Monday following the release of a broker note out of Citi.
According to the note, the broker has upgraded Afterpay’s shares to a buy rating from neutral. It has, however, trimmed the price target on its shares by around 8% to $31.10.
Despite the lower price target, it still implies potential upside of almost 10% even after today’s gain.
Why is the broker bullish on Afterpay?
Citi made the move due to a couple of reasons. One was the recent pullback in its share price, which it feels has brought its shares down to an attractive level.
The other reason is the broker’s recent research into the buy now pay later sector. Particularly, in respect to app downloads and website traffic. After reviewing the data, it believes Afterpay was a strong performer in the United States during October.
In addition to this, it believes that the addition of a number of key brands to its platform will support strong underlying sales during the important holiday period.
And while the broker does see increasing and fierce competition as a big risk for the company, it isn’t enough to put stop it from upgrading its shares to a buy rating today.
Elsewhere, the CSL Limited (ASX: CSL) share price is pushing higher today after being upgraded by a broker.
A note out of UBS reveals that its analysts have upgraded the biotherapeutics company’s shares to a buy rating and lifted the price target on them to $295.00. More on that here.