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Big brokers still love the Afterpay (ASX:APT) share price

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The Afterpay Ltd (ASX: APT) share price has taken a breather in recent weeks after running to an all-time record high of $123.40 on 18 December 2020. Despite the company’s ballooning valuation, big brokers are still edging their Afterpay share price targets higher. 

Recent breather for the Afterpay share price 

The Afterpay share price has been choppy in recent weeks, largely driven by movements in the broader market and tech sector. The company has not announced any market sensitive news or updates since 2 December 2020 regarding new monthly sales milestone in November. 

US politics has been a key driver of the heightened level of volatility in the tech sector. Last Thursday, the Democrats were poised to take control of the Senate, threatening increased regulation. 

The control of the Senate spells good news for incoming President Joe Biden’s agenda on issues including healthcare, the environment, government reform and the economy. Experts see this victory as a potential rotation away from tech shares into more cyclical sectors, similar to what the market experienced back in October and November last year. 

Brokers keen on Afterpay 

Citi is the first broker to upgrade its Afterpay share price target in the new year. The broker raised its price target from $97.75 to $115 with a neutral rating on Tuesday. 

Other brokers have yet to provide updates for Afterpay in 2021. 

Morgan Stanley previously retained an overweight rating with a $120 price target on 3 December 2020. The broker notes that Afterpay’s November sales were ahead of expectations and operations appear to be on track. 

Credit Suisse initiated coverage on 7 December 2020 with an outperform rating and $124 price target. The broker anticipates a strong growth outlook to underpin strong financial performance and investor returns. 

Goldman Sachs retained its neutral rating and $99.90 price target on December 7. There was no change in rating or target after reviewing the November milestone. 

Afterpay in 2021 

Afterpay has hinted at a few things that investors can look forward to in 2021. 

Its first steps into the rest of Europe is currently pending the approval from the Bank of Spain. The company’s acquisition of Pagantis in Europe will allow the company to launch into Spain, France and Italy immediately. 

Afterpay is also eyeing the South Asia market after establishing a base in Singapore. While no official plans are set, the company is looking to develop a strategy to enter this new market. 

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Returns as of 6th October 2020

Motley Fool contributor Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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