The Openpay Group Ltd (ASX: OPY) share price was out of form on Friday and dropped lower again.
The buy now pay later provider's shares dropped 0.75% to $2.75.
This means the Openpay share price is now down 43% from its 52-week high of $4.80.
Is this a buying opportunity?
One broker that believes this is a buying opportunity is Shaw & Partners.
In fact, the broker believes Openpay's shares can go even higher than its 52-week high over the next 12 months.
According to a note out of the broker this week, its analysts have reiterated their buy rating and $5.00 price target on the company's shares.
Based on the current Openpay share price, this price target implies potential upside of 82%.
What did the broker say?
Shaw & Partners was pleased with Openpay's recent trading update which revealed strong growth across customers, merchants, plans, and transaction value during October.
It also notes that management spoke positively about trading so far in November thanks partly to the Click Frenzy event.
Another big positive for the broker was its merchant additions. Shaw & Partners was pleased with the significant and numerous merchant wins. These include Kogan.com Ltd (ASX: KGN), NASDAQ-listed BigCommerce Holdings, Surfstitch, Dick Smith, BBQs Galore, Intersport, and Tarocash.
Also catching the eye of its analysts was its cash balance. At the end of the first quarter, Openpay's cash balance stood at a healthy $65 million. It notes that this equals a solid 16 quarters of funding runway.
What about the future?
Shaw & Partners appears confident Openpay's strong growth will continue.
It explained: "Key take-away: 2Q21 is shaping up to be potentially massive period given (1) underlying seasonal growth expected to be significant given peak Black Friday/Click Frenzy/Xmas trading to come; (2) recent wins from Kogan, JD Sports Australia and Just Group all contributing; (3) WOW deal now "live"; (4) Pentana / MSL still to be fully implemented; and (5) VIC re-opening,"
"BUY on TSR of 83%. OPY also trades at a significant – and attractive – 40% discount to listed BNPL peers on an FY21 EV/Sales multiple of 7.6x vs. combined 13.2x (consensus) for APT, LBY, SPT, SZL, Z1P," it concluded.
