Brokers have run the ruler for the Afterpay Ltd (ASX: APT) share price over the weekend and come up with new price targets. This comes after the company's half-year results announced last Thursday and a 20% slump in share price after hitting an all-time record high of $160.05 on 11 February.
Mixed views on the Afterpay share price
On 1 March, Macquarie Group Ltd (ASX: MQG) rated the Afterpay share price as neutral with a $140.00 share price target. Macquarie remains cautious on Afterpay shares as the company missed revenue growth estimates. Neither updates regarding its imminent launch into Europe nor established Asian base was enough to excite the broker. Its neutral stance was largely driven by the increasing competition in the buy now, pay later sector.
On the same day, Ord Minnett noted that it was bullish on Afterpay results with a buy rating and target price of $150.00. The broker was particularly pleased with its strong growth across key North American and UK regions. It also sees value in the company's new Afterpay Money product which is expected to launch in 2021. The app will help Australians manage their money with features including mobile banking, a linked Afterpay account and an Afterpay loyalty program.
On 3 March, Citi was neutral on Afterpay shares with a $124.80 price target. The broker was upbeat about the company's new products, features and geographic launches as a catalyst to boost sales and profit margins. However, it also acknowledged that e-commerce sales could slow in a post-COVID world and rising competition could pose a risk to growth and margins. Taking into consideration both the catalysts and risks, Citi maintained its cautious neutral rating and flat price target.
Afterpay eyes geographic and product expansion to drive growth
Beyond Afterpay's triple-digit growth reported in its half-year results, the company has taken aim to expand its geographic footprint and product suite in the near-term.
The company noted that Canada was a region that continues to ramp up with new merchants and customers. The UK has been a very successful region for both Afterpay and its ASX BNPL rivals. However, the rest of Europe remains largely untouched. Afterpay notes that its acquisition to launch into 4 European countries is imminent and on track to complete in Q3 FY21.
Finally, Afterpay plans to launch an "Afterpay Money" app to help Australians manage payments and savings while being linked to an Afterpay account and Afterpay loyalty program. Users can deposit money into the account, which will be held on the Westpac Banking Corp (ASX: WBC) balance sheet.
Afterpay believes that this will create a captive ecosystem that will enable it to launch new products, services and revenue streams.
