The Afterpay Ltd (ASX:APT) share price could be fully valued at the current level according to one leading broker. Here’s why…
The post Is the Afterpay (ASX:APT) share price fully valued? appeared first on The Motley Fool Australia. –
The Afterpay Ltd (ASX: APT) share price is back on form on Thursday and pushing higher.
In afternoon trade, the payments company’s shares are up almost 2% to $123.95.
Can the Afterpay share price go higher?
According to one leading broker, the Afterpay share price may have peaked for the time being.
A note out of Morgans reveals that its analysts have retained their hold rating and cut the price target on its shares to $121.00.
What did Morgans say?
Morgans notes that there was a lot to like from Afterpay’s third quarter update this week.
It was pleased to see its North American underlying sales continue to grow strongly. The broker notes that sales increased 167% on the prior corresponding period or 211% in constant currency.
Morgans also points out that its in-store momentum in the region appears to be accelerating, with March sales annualised implying a run-rate over $225 million. This compares to $180 million during the first half.
Its analysts were also pleased to see revenue margins holding firm and gross loss rates remaining below historical levels.
Another positive in the broker’s eyes was its transaction frequency. It notes that the top 10% of customers globally (by value) are now transacting an average of 33 times per year.
Morgans was also pleased to see that Clearpay is on track to launch in Germany during the first half of FY 2022, along with Afterpay Money in the Australian market.
What didn’t it like?
One thing that appears to have caught the eye of Morgans is that its sales momentum slowed during the third quarter.
In fact, it points out that sales in the US and UK were flat quarter on quarter and down quarter on quarter in the ANZ market.
As a result of this, the broker has lowered its earnings forecasts to reflect lower sales growth assumptions.
Morgans concluded: “APT is a quality business, in our view, but we retain our Hold recommendation on valuation grounds.”
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.
*Returns as of February 15th 2021
- Top brokers name 3 ASX shares to sell today
- Is the Afterpay (ASX:APT) share price a buying opportunity right now?
- High-flying ASX tech shares could fall another 90%: fundie
- 5 things to watch on the ASX 200 on Thursday
- Top brokers name 3 ASX shares to buy today
Motley Fool contributor James Mickleboro 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.