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Afterpay share price: What 4 top brokers thought of the Q3 report

We look at what four Australian brokers thought of the company’s latest quarterly update.

Afterpay Share Price ↓

After opening at $129 on Tuesday, the Afterpay (ticker: APT) share price has drifted lower, last trading around the $121 handle.

This comes after the fast-growing BNPL company on Tuesday released its latest set of quarterly (Q3) figures, reporting another period of spectacular growth, while also revealing it was considering a US listing.

Read our full coverage of Afterpay's third quarter results here.

Analyst Corner

With Afterpay remaining closely watched by investors, commentators and market analysts, it’s worth looking at how the sell-side responded to this new set of quarterly figures.

In general, analysts have been bullish cheerleaders of the stock over the last two years, as Afterpay transitions from fledgling tech play to global payments giant. Indeed, many have raised their price targets to stratospheric heights in that time, while others, such as UBS, continue to rail against the consensus.

Key analyst views on Afterpay are summarised in the below table:

Broker

Rating

Price Target

Macquarie

Neutral

$120.00

Wilsons

Overweight

$151.05

UBS

Sell

$36.00

Morgan Stanley

Overweight

$149.00

Macquarie

In response to the Q3, Macquarie retained their Neutral rating and $120 price target on Afterpay. Even so, the investment bank remains ahead of consensus for the company’s FY21 revenue and gross profit targets, at $945 million and $695 million, respectively.

On the prospect of a potential US listing, Macquarie analysts had this to say:

‘If executed we see this as a positive increasing Afterpay’s competitive advantage through access to an enlarged capital base.’

Wilsons

Compared to Macquarie, analysts from Wilsons remain decisively bullish on APT, saying the company delivered a ‘trifecta’ in the third quarter, that being: accelerated growth, stable merchant margins and an improved loss profile.

Not only that, but Wilsons seems unmoved by worries of competitive pressures in the space, saying:

‘We believe competition concerns remain muted for some time, and major catalysts such as a major Marketplace deal […] give a case for upside as we await new market success to materialise.’

The broker has an Overweight rating and $151.05 price target on APT.

UBS

Analysts from the Swiss investment bank remain as sceptical as ever in the wake of Afterpay’s Q3 update, saying that while the company’s second half performance is tracking in line with estimates, its performance across different geographies is decidedly more mixed.

Moreover, despite Afterpay exploring a US listing and positively emphasising the explosive growth of its US business, UBS was keen to point out:

‘That while the US business is now the largest contributor in terms of volumes, it is currently loss-making and has structurally lower margins due to high interchange fees.’

Accordingly, UBS has a Sell rating and $36 price target on Afterpay.

Morgan Stanley

Seemingly ever bullish, Morgan Stanley reiterated their $149 price target and Overweight rating following the third quarter data release.

The investment bank said the March quarter sales performance implies 'improving customers engagement and sales per customer’, which, according to Morgan Stanley 'bodes well for APT building out its eco-system.'

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