Is Afterpay worth $51.50 per share?

Morgan Stanley remains unmoved. Bell Potter bullish. And the market, infatuated.

During the height of the coronavirus-led market panic – when Afterpay (APT) traded below $10 per share – if someone had of told you that their 12-month price target on the stock was $51.50 per share, the reaction surely would have been one of incredulity.

Rightfully so! At its March low, that price target would’ve implied upside of over 500%.

But we’re no longer at those March lows: Central banks are making aggressive moves to shore up their respective economies, investors are as bullish as ever and Afterpay is back to being the ASX’s market darling.

Those sub-$10 prices now just represent wishful entry points for APT perma-bulls; or disastrous reminders for those looking to short cult stocks.

Is Afterpay worth $51.50?

Anyway, Bell Potter today revealed that it had upgraded its 12-month price target on Afterpay to $51.50 per share while retaining its Buy rating. This move was somewhat expected: Afterpay is growing its user-base faster than expected, as a result its earnings are expected to come in higher across FY21e and FY22e, and at current US user levels, the company has reached the elusive stage of ‘critical mass,’ according to Bell.

As we wrote yesterday:

‘Afterpay today announced that it had cracked 5 million active customers in the US, taking the company’s US user-base to over 9 million.’

The stock rose on that news and it rose again today: Afterpay opened at $44.250 per share. It closed Thursday’s session at $44.00 per share.

Bell Potter analysts said the US user growth news was ahead of its expectations and that ‘the COVID-19 related cuts we pushed through in March appear to be too conservative, and in fact, APT is accelerating its growth rate with daily new users up 30-40% in the last 10 weeks versus what was experienced in January and February.’

And better still, ‘with 5m active users Afterpay is better able to target bigger retailers and deliver something tangible: a captive audience, along with providing its other typical benefits of higher conversion rates, larger basket sizes and increased repeat customer,' the broker finished.

In response to this release, the broker upgraded their earnings per share (EPS) forecasts across FY20e to FY22e by 1.2%, 9.0% and 8.4%, respectively.

Elsewhere, Morgan Stanley (MS) was less inclined to bump up their price target off the back of Afterpay's US user milestone, commenting that this growth was already baked into the share price.

MS remains equal-weight APT.

The investment bank did make the interesting point that between a split of 9 million users and 5 million active users, there is a large dormant base within the US. Make of that what you will.

How to trade ASX-listed tech stocks

You can use IG’s world class trading platform to trade the likes of Afterpay, Appen, WiseTech, Nearmap and others – both LONG and SHORT – today.

For example, to buy (long) or sell (short) Afterpay using CFDs, follow these easy steps:

  1. Create an IG Trading Account or log in to your existing account
  2. Enter ‘APT’ in the search bar and select it
  3. Choose your position size
  4. Click on ‘buy’ or ‘sell’ in the deal ticket
  5. Confirm the trade

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

Please see important Research Disclaimer.

Seize a share opportunity today

Go long or short on thousands of international stocks.

  • Increase your market exposure with leverage
  • Get spreads from just 0.1% on major global shares
  • Trade CFDs straight into order books with direct market access

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.


Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.