Bell Potter raises Afterpay price target from $3.53 to $3.94

By Trevor Hoey. Published at Jan 19, 2017, in Features

Following the release of Afterpay (ASX: AFY) results for the three months to December 31, 2016, Bell Potter has substantially increased its revenue projections for fiscal years 2017 and 2018, stating that the provider of alternative layby type services third quarter performance was ‘nothing short of phenomenal’.

After lifting its fiscal 2017 revenue estimate by 29.7% and flagging profitable trading for the six months to June 30, 2017, the broker increased its 12 month price target from $3.53 to $3.94, representing a 50% premium to Thursday’s closing price of $2.65.

Founded in 2014, Afterpay is a leading Australian retail payments innovator that facilitates commerce between retail merchants and end customers, offering a ‘buy now, receive now, pay later’ service that does not require end customers to enter into traditional loan arrangements or pay any upfront fees to the group.

Bell Potter estimates that Afterpay is adding over 1000 users a day, effectively disrupting the online retail landscape with the potential to establish its own particular brand of ‘modern layby’.

From a merchant perspective the group recently added Country Road and Super Retail Group to its list of clients

The broker is forecasting the group to record a slight loss in fiscal 2017 before achieving its maiden profit of $8.6 million in fiscal 2018.

It should be noted that broker projections and price targets are only estimates and may not be met. Also, historical data in terms of earnings performance and/or share trading patterns should not be used as the basis for an investment as they may or may not be replicated. Those considering this stock should seek independent financial advice.

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