The Afterpay Ltd (ASX: APT) share price has been a standout performer among buy now, pay later (BNPL) shares. Afterpay's competitors such as Zip Co Ltd (ASX: Z1P), Splitit Ltd (ASX: SPT), Sezzle Inc (ASX: SZL), Laybuy Holdings Ltd (ASX: LBY) and Openpay Group Ltd (ASX: OPY) are all well below their record all-time highs, while Afterpay may go up even higher.
The company's upbeat quarterly update saw a series of positive broker updates come about for the Afterpay share price target. However, given Afterpay's ballooning $28 billion valuation on $519.2 million revenue and a loss of $22.9 million in FY20, the general concensus is cautious. These broker upgrades are still below the current Afterpay share price of $99.04.
Cautious updates to the Afterpay share price
UBS Group AG (NYSE: UBS) has been the least optimistic broker for its Afterpay share price target. The broker has maintained a price target within the $20 range throughout Afterpay's run to $100. Yesterday, the broker nudged its price target from $28.50 to $30.00 and retains a sell rating. Despite continuing improvement in transaction values and customer growth, the broker still sees this market leader as overvalued.
Goldman Sachs Group Inc (NYSE: GS) raised its Afterpay share price target from $93.45 to $94.40 and retains a neutral rating. It reacted positively to Afterpay's first quarter trading update and notes robust customer growth in the United States and improving margins. However, the broker remains cautious about increasing competition. Afterpay's current share price is ahead of its target so it retains a neutral rating.
What investors can look forward to
While the Afterpay quarterly update was positive and highlighted its strong growth trajectory, it also shed light on its global expansion and demographic tailwinds.
In August, Afterpay launched its product in Canada, with a number of large retailers now live, integrating or signed. In its FY20 results, Afterpay outlined its plan to enter the rest of Europe via the acquisition of Pagantis. This acquisition is progressing well and is on track for completion by the end of the 2020 calendar year, pending regulatory approval by the Bank of Spain.
This will provide Afterpay a licence to operate in Spain, France, Italy and Portugal as well as pending licence passport applications in Germany and Poland. The company has completed a cross-functional, 100-day integration plan to launch as soon as possible, post completion.
Plans to expand into Asia are also progressing well with the established base in Singapore to drive the development of the Southeast Asia market. Its acquisition of local BNPL 'Empatkali' in Indonesia is also under way.
