The Afterpay Ltd (ASX: APT) share price finished flat on Monday despite posting another set of strong quarterly results. At the time of writing, the Afterpay share price is trading at $122.52, down 2.16%.
The company recorded classic triple-digit growth with group March quarterly sales up 104% on the prior corresponding period. The leading buy now pay later’s (BNPL) active customers increased 75% to 14.6 million, up from 8.4 million a year ago. Key highlights for the quarter include its first sales from Europe and a potential US listing.
Here are the updates from big brokers after digesting Afterpay’s results.
Credit Suisse remains bullish on the Afterpay share price
Underlying sales came in slightly ahead of Credit Suisse’s expectations. However, seemingly strong customer growth figures came in slightly weaker than what the broker was expecting.
The broker lowered its estimates for underlying sales by 2% for FY21 and 1% for FY22 to FY25. The lower sales forecasts translate to a larger loss forecast in FY21 and a slightly lower profit for the other years.
Despite lower forecasts, the broker retained its outperform rating with a $145 target price.
Morgans retained its hold rating
Lower sales growth forecasts appear to be a consistent theme in broker updates for Afterpay.
Morgans lowered the company’s FY21 earnings per share forecasts by 7% and FY22 by 8% on lower sales growth assumptions.
As a result, the broker lowered its target price from $125.3 to $121 with a hold rating.
UBS is permanently bearish on Afterpay
UBS began coverage of the Afterpay share price back in mid-October 2019, and its been sell rated ever since.
Today’s UBS note comes as no surprise with the broker retaining its sell rating with a $36 target price.
The broker observes that Afterpay’s update was mixed against its expectations and has followed the trend in lowering forecast sales.
Foolish Takeaway
The Afterpay share price has opened 2% lower to $122.20 on Wednesday following a sharp selloff in US markets overnight. Brokers are in a tug of war with views that Afterpay shares will go higher, flat, and lower.
While target prices may vary, there appears to be a consistent theme of lower forecast sales. This ultimately reminds me of Macquarie’s in-depth report on how the Afterpay share price will perform in the short to medium term.
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Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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