Here’s what this broker thought of the Afterpay (ASX:APT) Q1 update

Is the Afterpay Ltd (ASX:APT) share price in the buy zone following its Q1 update? Here’s what this leading broker thinks…
The post Here’s what this broker thought of the Afterpay (ASX:APT) Q1 update appeared first on Motley Fool Australia. –

watch broker buy

The Afterpay Ltd (ASX: APT) share price has been caught up in the market selloff and is tumbling lower today.

In afternoon trade the payments company’s shares are down 3.5% to $99.33.

Is this a buying opportunity?

While I think this pullback could be a buying opportunity when the dust settles on this latest market volatility, one leading broker believes investors should wait for an even better entry point.

According to a note out of Goldman Sachs, this morning the broker held firm with its neutral rating and lifted its price target to $94.40 following its first quarter update.

Goldman was pleased that Afterpay’s operating momentum appears robust. However, it notes that its customer additions in the United States fell short of its expectations. The broker had forecast US customer numbers of 6.7 million, compared to the 6.5 million that it reported.

It commented: “APT operating momentum appears robust although customer additions in the US of 6.5mn were below GSe 6.7mn. We note, however, the December quarter in the US is seasonally a very strong one and customer addition run-rates were indicated to be accelerating into October.”

Two things the broker was particularly pleased with were the growing frequency of use in the ANZ market and its net transaction profit margin. These were both ahead of its expectations.

What else did Goldman Sachs say?

Goldman Sachs expects Afterpay to continue to execute strongly, however it does have concerns over the impact of increasing competition.

The broker commented: “While APT continues to execute strongly and we anticipate it will have a strong December 2020 quarter, at this stage we remain Neutral rated reflecting the fact we expect competition to intensify particularly in the US market.”

Goldman notes that plenty of institutional funds have been flooding into the industry. 

“A number of APT’s US competitors have recently completed equity raisings. Klarna announced a US$650mn equity funding round in September 2020 and Affirm raised US$500mn in September 2020 in a series G funding round ahead of its launch of a fortnightly instalment product with Shopify. We also note that Paypal has launched its ‘pay in 4’ product for the upcoming holiday season,” it explained.

In light of this, the broker will be holding firm with its neutral rating for the time being.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

See The 5 Stocks

*Returns as of June 30th

More reading

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Here’s what this broker thought of the Afterpay (ASX:APT) Q1 update appeared first on Motley Fool Australia.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!