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On Monday I looked at three ASX shares that brokers have given buy ratings to this week.

Unfortunately, not all shares are in favour with them right now. Three that have just been given sell ratings are listed below. Here’s why these brokers are bearish on these ASX shares:

Flight Centre Travel Group Ltd (ASX: FLT)

According to a note out of Morgan Stanley, its analysts have downgraded this travel agent’s shares to an underweight rating with a $17.50 price target. The broker made the move on valuation grounds, noting that its shares are now trading above their pre-pandemic levels after adjusting for its capital raising. And while it expects Flight Centre’s earnings to rebound in FY 2022, it believes there are better value options for investors in the travel and tourism sector. The Flight Centre share price is fetching $19.09 today.

Goodman Group (ASX: GMG)

A note out of Goldman Sachs reveals that its analysts have retained their sell rating but lifted their price target on this property company’s shares to $12.90. Following a detailed review of its half year results, the broker has upgraded its earnings estimates for the coming years. Nevertheless, its estimates are still below consensus and the broker feels its shares are expensive at current levels. The Goodman share price is currently trading notably higher than this price target at $17.61 on Tuesday afternoon.

Vicinity Centres (ASX: VCX)

Analysts at UBS have retained their sell rating but lifted their price target on this shopping centre focused property company’s shares to $1.54. According to the note, the broker believes that valuations could come under pressure as income profiles and yields are adjusted to account for its lower growth profile. Especially given how city retail properties continue to face difficult trading conditions because of domestic and international border restrictions and working from home initiatives. The Vicinity share price is trading at $1.71.

More reading

• These 2 ASX shares are the newest “buy” ideas from top brokers
• Share market on watch over AstraZeneca vaccine fears
• The Flight Centre (ASX:FLT) share price is up 40% in six months: Can it go higher?
• These are the 10 most shorted shares on the ASX
• The JobKeeper payment is ending. So what will happen next?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Flight Centre Travel Group Limited. 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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PropTech Group Ltd (ASX: PTG) shares have reached an all-time high after the company advised it has signed a letter of intent with Harcourts International.

At the time of writing, the PropTech share price is soaring 17.65% to 50 cents. In earlier trade, the company’s shares reached an intraday high of 54 cents, surpassing their previous all-time high of 52 cents reached in December last year. 

PropTech Group provides a range of property analysis technologies, sales management and software-as-a-service tools targeted at property investors and real estate agencies across Australia, New Zealand and the United Kingdom. Its brands include MyDesktop, VaultRE and Real Estate Investar.

Let’s take a look at what the company announced today.

Potential deal with Harcourts

The PropTech share price is on the rise after the company declared this new deal, if successful, will see the VaultRE product on track to cement “its position as the clear market leader” in the ANZ region.

In its announcement, PropTech advised that Harcourts is the largest real estate group in New Zealand and is also growing fast in Australia. It makes up the second-largest property franchise group in the Australia/New Zealand region. 

If the agreement is successful, Harcourts would join Ray White and Raine and Horne in using VaultRE, PropTech’s CRM software. Together, the companies make up Australia and New Zealand’s three largest franchise real estate groups.

Harcourts has proposed that VaultRE will be the only CRM software endorsed across its Australasian network.

The agreement would see PropTech taking control of Harcourts’ existing proprietary software. Then, while providing support across both platforms, transitioning Harcourts’ 600 Australian and New Zealand offices onto its VaultRE software.

Management commentary 

Joe Hanna, CEO and Managing Director of PropTech Group, said the company is honoured to potentially work with Harcourts:

The PropTech Group’s mission is to streamline inefficient workflows in high-performing real estate agencies by investing in product improvement, rapid innovation, and AI solutions. We look forward to bringing our market-leading tools to the Harcourts’ network to migrate their 600 plus offices in New Zealand and Australia to the VaultRE platform.

PropTech share price snapshot

The PropTech share price was out of action for most of last year, having entered a voluntary trading halt in early March and resuming trading on 24 November 2020. Since resuming trade, PropTech shares have surged by nearly 80%. Currently, the PropTech share price is also up by around 19% year to date.

The company has a market capitalisation of around $23.7 million with approximately 122 million shares outstanding.

More reading

• Leading brokers name 3 ASX shares to sell today
• 3 reasons why the Redbubble (ASX:RBL) share price could be a buy
• Why Advance Nanotek, BHP, Limemade, & Metcash shares are sinking
• The Afterpay Ltd (ASX:APT) share price on watch after launch in France, Spain and Italy
• Why the Bellevue (ASX:BGL) share price is charging higher today

Motley Fool contributor Brooke Cooper 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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There are a number of reasons why investors may want to be interested in the Redbubble Ltd (ASX: RBL) share price.

What’s Redbubble?

In Redbubble’s own words, its community of ‘passionate creatives’ sell uncommon designs on high-quality, everyday products such as apparel, stationery, housewares, bags, wall art and other categories.

It operates two websites, one is Redbubble.com and the other is TeePublic.com. Through these two e-commerce platforms, artists are able to profit from their creativity.

Who thinks the Redbubble share price is a buy?

One broker that thinks Redbubble shares are a buy is Morgans, which has a share price target of $6.64.

Fund manager Joseph Kim from Montgomery Investment Management is also a fan of the business. Mr Kim said:

The opportunity set for Redbubble is compelling. The business already has a global presence with its main markets being North America and Europe. Should the company build a recognisable brand, the potential to be a global e-commerce marketplace for aspiring artists presents significant upside. Recent interest in both social and mainstream media point to growing brand awareness, which helps perpetuate the flywheel effects.

It’s important to note Redbubble’s recent success has required continuous investment – not just in the website itself, but also the supply chain infrastructure with fulfillers and shippers – including product quality control. This has helped the business meet the surge in demand, while benefiting financially from the operating leverage that comes with higher sales.

Rising profit margins

Redbubble has seen its operating leverage increasing, as Mr Kim alluded to.

In the first half of FY21, its marketplace revenue jumped 96% to $352.8 million, whilst earnings before interest, tax, depreciation and amortisation (EBITDA) grew 1,028% to $48.8 million and earnings before interest and tax (EBIT) grew 2,270% to $41.8 million.

Aside from the EBITDA and EBIT margins – which just went positive – the other margins also improved materially.

The gross profit margin (on marketplace revenue) grew 4.1 percentage points to 40.8%. The gross profit after paid acquisition/marketing (GPAPA) improved 2.6 percentage points to 28.3%.

As Redbubble’s profit margins increased, the bottom line can improve much faster than just the revenue growth. This could help the Redbubble share price.

Focused management and a focused business

The Redbubble management have spoken about the focus of the business to maintain and improve its market position and strengths.

Michael Ilczynski, the CEO of Redbubble, said:

The strategic priority for the group now is to ensure we extend the market leadership we have established. We intend to invest in both the artist and customer experiences, to improve loyalty and retention and to ensure long-term growth.

Redbubble has four areas that it’s focused on.

It’s focused on artist acquisition, activation and retention. Another key initiative is user acquisition and transaction optimisation. The next focus is customer understanding, loyalty and brand building. The final focus is further physical product and fulfilment network expansion.

E-commerce and growing product offering

Redbubble says that it’s an emerging winner in a rapidly shifting landscape, with the company pointing out that on-demand technology and user-generated content has enabled rapid scaling. Broker Morgans believes Redbubble will be a long-term beneficiary of the e-commerce shift.

The ASX share also says that it’s benefiting from the virtuous cycle of a growing community of artists which is fuelling strong demand for unique content.

As the company adds another category of products to its offering, it opens up a larger total addressable market. The addition of masks last year unlocked millions of dollars of revenue.

Is there much upside for the Redbubble share price?

To reach Morgans’ price target of $6.64, that represents a potential increase of 11% over the next 12 months.

More reading

• Will the ASX share e-commerce boom last?
• Will the Kogan (ASX:KGN) share price outperform in 2021?
• Nasdaq slumps overnight, ASX 200 shares to open weaker
• Why Afterpay, IOUpay, Liontown Resources, & Redbubble are racing higher
• Top ASX shares to buy in March 2021

Motley Fool contributor Tristan Harrison 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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The S&P/ASX 200 Index (ASX: XJO) is having a very positive day on Tuesday. In afternoon trade, the benchmark index is up 1.2% to 6,856.4 points.

Four ASX shares that have failed to follow the market higher today are listed below. Here’s why they are sinking:

Advance Nanotek Ltd (ASX: ANO)

The Advance Nanotek share price is down 9% to $4.01. This may be due to profit taking after some strong gains recently. As the company creats ingredients that go into sunscreen products, investors may have been hopeful that demand will increase now that COVID-19 vaccines are being rolled out.

BHP Group Ltd (ASX: BHP)

The BHP share price is down 1.5% to $47.19. This is despite there being no news out of the mining giant today. However, while Goldman Sachs continues to rate BHP shares as a buy, this morning it warned that iron ore was likely to go from being in a deficit this year to a surplus in 2022. This is expected to put pressure on the price of the steel making ingredient.

Limeade Inc (ASX: LME)

The Limeade share price has continued its slide and is down a further 2.5% to 88.5 cents despite a rebound in the tech sector. Investors have been selling the employee experience software company’s shares since the release of its results last month. Particularly disappointing investors was its guidance for FY 2021. Management expects revenue of US$50 million to US$53 million. This is a decline on FY 2020’s revenue of US$56.6 million. Falling customer numbers is weighing on its performance.

Metcash Limited (ASX: MTS)

The Metcash share price is down 3.5% to $3.40 following the release of its strategy update. At the event, the wholesale distributor also revealed that its strong sales momentum had continued for all business segments during the second half of 2021. Supermarket, hardware, and liquor sales have all experienced double-digit growth compared to the prior corresponding period. Investors may have been expecting an even stronger update.

More reading

• ASX 200 up 0.8%: Metcash update, tech shares rebound, PointsBet acquisition
• Should you buy BHP, Fortescue, or Rio Tinto shares?
• Why the Metcash (ASX:MTS) share price is in focus
• Chinese factory output is up an astonishing 35%
• 5 things to watch on the ASX 200 on Tuesday

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Advance NanoTek Limited and Limeade, Inc. 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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The Afterpay Ltd (ASX: APT) share price is on watch today. This comes after its official launch in Southern Europe with merchants in France, Spain, and Italy. While Afterpay has yet to release an announcement on the ASX, co-founder and Co-CEO Nick Molnar confirmed the launch this morning. 

At the time of writing, the Afterpay share price is trading at $111.30, up 2.74%. 

Clearpay to bring the Afterpay share price to Europe 

Afterpay previously announced the completion of its Pagantis acquisition on 10 March. It hinted that Spain, France, and Italy would be the first countries to go live through its subsidiary, Clearpay. The company’s commentary cited that these three countries combined have an addressable e-commerce market that exceeds 150 billion euros. 

In Afterpay’s half-year results presentation, the company highlights buy-now-pay-later (BNPL) as an emerging participant in the $9.4 trillion global retail market. By geography, North America, the European Union, the UK, and ANZ represent a respective 60.5%, 27.5%, 7.5%, and 4.5% of the global retail market. The presentation also noted Afterpay had over a $1 billion pipeline of global merchants in process of contracting for the EU. 

With the green light obtained from the Bank of Spain, Afterpay now has the ability to provide its products to a broader market. This includes Germany and Portugal, alongside its launch in France, Spain, and Italy today. 

Comments from the CEO

Nick Molnar further commented on the recent growth in e-commerce and entry into Europe: 

In the last year, global ecommerce grew faster than it had in the last ten years. By introducing Clearpay, we are giving Europeans a better way to access the things they want and need in their lives via a flexible payment service that allows shoppers to spend their own money and pay over time – instead of turning to expensive loans and credit cards which come with interest, fees and revolving debt.

Afterpay has taken the first-mover advantage into the EU. This puts it ahead of ASX-listed BNPL rivals such as Zip Co Ltd (ASX: Z1P) and Sezzle Inc (ASX: SZL). Zip currently has two minority investments providing the company leverage into the United Arab Emirates, Czechia, and Poland.  

The Afterpay share price has pushed higher this afternoon and is currently 2.85% higher at the time of writing. 

More reading

• Here’s what Citi thinks about the Afterpay (ASX:APT) share price
• 5 things to watch on the ASX 200 on Tuesday
• Why did the Afterpay (ASX:APT) share price and 2 other BNPLs fall today?
• ASX 200 recovers, Evolution Mining acquisition, Afterpay sinks
• Here’s why the Sezzle (ASX:SZL) share price is crashing 5% today

Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Sezzle Inc. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Sezzle Inc. 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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The Bellevue Gold Ltd (ASX: BGL) share price is up 5.42% in early afternoon trading after ASX gold miner announced its latest drill results.

At the time of writing, the Bellevue share price is trading for 81.7 cents per share after earlier posting gains of nearly 7%.

What drill results did Bellevue report?

In today’s release, the company reported a new batch of high-grade results from its drilling program at the Marceline discovery within its Western Australia Bellevue Gold Project.

The fresh batch of results extends the known strike length of Marceline to 500 metres. Bellevue reported that the mineralisation remains open in every direction and that it will continue with step-out and infill drilling at the discovery.

The company listed the following significant results:

• 8m @ 20.1g/t including 0.9m @ 102.7g/t gold from 489.4m in DRDD590
• 1m @ 45.5g/t gold from 503.4m in DRDD600
• 2m @ 21.0g/t gold from 459m in DRDD614
• 0m @ 16.7g/t gold from 455.7m in DDUG0005
• 9m @ 13.0g/t gold from 462.1m in DRDD598
• 2m @ 45.1g/t gold from 479.4m in DRDD589
• 2m @ 6.0g/t gold from 379.8m in DRDD598
• 5m @ 12.1g/t gold from 459.9m in DDUG0010

What did management say?

Commenting on the latest drill results, Bellevue managing director Steve Parsons said:

These latest results, with grades of more than 20 g/t, show that Marceline is a significant discovery in its own right. But given the scope to leverage the planned and existing infrastructure at Bellevue, Marceline has the potential to contribute to the production profile and mine life estimates in the stage two feasibility study.

One of the main benefits being that $10 million of capital has already been costed in the stage one study and any additional ounces coming into the mine plan from the Marceline Lode are expected to benefit from a lower level of capital intensity.

Bellevue Gold expects to complete its stage two feasibility study at Marceline in the June quarter.

Bellevue Gold share price snapshot

Over the past 12 months, Bellevue shares have gained 133%. That compares to a 40% gain on the All Ordinaries Index (ASX: XAO).

Year-to-date, however, the Bellevue share price is down 31%.

More reading

• Why the Bellevue Gold (ASX:BGL) share price is on watch
• Why is the Bellevue Gold (ASX:BGL) share price frozen?
• Why the Bellevue Gold (ASX:BGL) share price is crashing 23% lower today
• Why Bellevue Gold, Coles, NRW, & Perpetual shares are trading lower today

Motley Fool contributor Bernd Struben 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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The Dexus Property Group (ASX: DXS) share price has been steadily rising today following the announcement of its agreement with AMP Capital Diversified Property Fund (ADPF).

At the time of writing, shares in the real estate group are changing hands for $9.55 a share, up 2.19%.

Merging to be bigger and better

According to the release, the Dexus Wholesale Property Fund (DWPF) has entered into an implementation agreement with the independent board committee of ADPF.

Similar acronyms aside, the two property funds are said to share similarities in property assets. As per the release, the overall sector allocation and portfolio quality of ADPF are comparable to the DWPF portfolio.

The proposed merger has been in the works for the past 6 months. Additionally, it seems the objective of the merger is to optimise performance through economies of scale. That should mean fewer costs and greater profits, explaining the increased Dexus share price today.

Dexus CEO, Darren Steinberg, added his comments in the release:

We are pleased to be able to make progress that will enable this merger to be voted on by both sets of Unitholders. This merger delivers further economies of scale from a management, procurement and leasing perspective across the platform and is strongly aligned with our objective of being the wholesale partner of choice.

If the merger is approved ADPF’s $5 billion fund will combine with DWPF’s $10 billion fund to… you guessed it, make a $15 billion property fund. The fund will remain invested in the office, retail, and industrial sectors.

What’s next for the Dexus property fund?

As noted in the release, Dexus and DWPF have struck a balance in the transaction structure that addresses the needs of ADPF unitholders, while also providing liquidity for DWPF. Consequently, the merger is subject to respective responsible entities, as well as both DWPF and ADPF unitholders.

Voting on the merger is expected to be held late next month. If approved, Dexus will then provide further details around how much the group will need to contribute and what the expected returns are.

Dexus share price snapshot

The Dexus share price was clobbered last year due to concerns of COVID-19. The uncertainty surrounding lease arrangements on office spaces, retail stores, etc. had investors fleeing. However, unlike many other shares, Dexus is still nowhere near its pre-pandemic highs. In fact, over the past 12 months, the property group’s share price has dropped 19.4%. 

In spite of the impacts, Dexus continues to pay a significant dividend, yielding 5.5%. 

The property market is picking up pace once again. Although, as mentioned by the AFR, there are ‘looming headwinds’ as lifestyles have changed.

More reading

• AMP (ASX:AMP) selling assets too cheaply warns Macquarie
• Bank of Queensland (ASX:BOQ) share price rises as it inks office deal with AMP (ASX:AMP)
• Demoted AMP exec paid $1m bonus for 53 days’ work
• AMP (ASX:AMP) share price on watch as second buyer for its asset could emerge
• ASX 200 sinks 2.4%, Afterpay plunges, AMP jumps

Motley Fool contributor Mitchell Lawler 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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The Temple & Webster Group Ltd (ASX: TPW) share price has been a very strong performer on Tuesday.

In afternoon trade the online furniture and homewares retailer’s shares are up over 10% to $10.12.

Despite this strong gain, the Temple & Webster share price is still trading 28% lower than its 52-week high of $14.05.

Why is the Temple & Webster share price surging higher?

There have been a couple of catalysts for the strong rise in the Temple & Webster share price today.

One has been a rebound in the tech sector after bond yields eased overnight in the United States. This has led to the S&P/ASX All Technology Index (ASX: XTX) rising a solid 2.3% this afternoon.

In addition to this, the Temple & Webster share price was given a boost this morning by a broker note out of Morgan Stanley.

According to the note, the broker has initiated coverage on the company’s shares with an overweight rating and $14.00 price target.

Even after factoring in today’s strong gain, this price target implies potential upside of almost 40% for its shares over the next 12 months.

Why is Morgan Stanley bullish?

The broker believes that recent weakness in the Temple & Webster share price has brought its shares down to an attractive level, creating a buying opportunity for investors.

Its analysts believe it is very early in the company’s growth story and see significant room for growth in the future. Particularly given the low levels of online penetration in the sector compared to the United States and UK markets.

Morgan Stanley isn’t alone with this bullish view. Goldman Sachs currently has a buy rating and $12.45 price target on its shares.

It is a fan for the same reason, noting that “we remain attracted to the structural tailwind of online commerce penetration and note that TPW has a leading position within its category which itself has a significant room for further online commerce growth.”

This could potentially make it worth considering Temple & Webster with a long term view.

More reading

• Why Clover, PointsBet, Syrah, & Temple & Webster shares are racing higher
• 2 ASX shares that are rapidly growing
• Will the ASX share e-commerce boom last?
• Why Afterpay, Nearmap, Temple & Webster, & Z Energy are tumbling lower
• 2 great ASX tech shares to buy today

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Temple & Webster Group Ltd. The Motley Fool Australia has recommended Temple & Webster Group Ltd. 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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The Resapp Health Ltd (ASX: RAP) share price is soaring today. ResApp shares are up 8.33% at the time of writing to 7.8 cents a share. The company closed at a price of 7.2 cents yesterday but opened at 7.3 cents this morning before rising as high as 8 cents.

Despite this healthy move today though, this is a company that has been on struggle street in recent months. ResApp is still down around 71% from its 52-week high of 23 cents, and down nearly 80% from where it was in mid-October last year. Saying that, the company is also up 58% from the 52-week low of 5.2 cents a share that we saw just a fortnight ago on 5 March (timing can be everything).

So who is this company? And why are ResApp shares soaring today?

Res-who?

ResApp was founded in 2014 and listed on ASX in 2015. As its name implies, ResApp is a digital healthcare company. It aims to develop digital healthcare solutions for both doctors and patients, specifically in the area of respiratory disease. The company develops software exclusively for smartphones, which are designed to be integrated into existing telehealth services. ResApp’s products can assist with diagnosing some of the most common repository illnesses. These include everything from common colds and the flu to sleep apnoea, asthma, and chronic obstructive pulmonary disease.

The company has developed algorithms that assess ‘lung sounds’ from breathing and coughing to accurately diagnose diseases. Using this machine learning, ResApp can provide a far more accurate diagnosis than a traditional stethoscope.

Why is the ResApp share price shooting higher today?

A number of events have transpired in quick succession for ResApp over the past week or so that might be influencing the company today.

Firstly, last week the company announced it was commencing a clinical study in the United States to assess the links between COVID-19 and coughing for its app. It’s aiming to develop an algorithm to identify COVID-19 through cough sounds recorded on a smartphone. The ResApp share price responded well to this announcement at the time.

Additionally, in a separate release last week, ResApp announced that it had inked a deal with pharmaceutical giant AstraZeneca (whom you might know as the maker of a COVID-19 vaccine). This deal is unrelated to COVID though. It instead involves AstraZeneca’s Japanese subsidiary using ResApp’s technology to support asthma patients. As we reported, the ResApp share price responded very positively at the time.

Further, ResApp was, as of last Friday (and effective yesterday) kicked out of the All Ordinaries Index (ASX: XAO) by its administrator S&P Global. Normally, exclusion from an index does not bode well for an ASX company. But somewhat perversely, this logic doesn’t seem to apply for this particular All Ords rebalance. Yesterday, we covered how a similar phenomenon was occurring with Ainsworth Game Technology Limited (ASX: AGI). The same thing seems to be happening to ResApp today.

Finally, before market open this morning, we were treated to an interesting insight into the company’s directors. According to ASX notices, three company directors have loaded up on ResApp shares over the past few days. That’s an obvious vote of confidence in the company from management which investors typically love to see.

It’s likely that one or a combination of these factors are pushing up the ResApp share price today.

More reading

• What’s happening with the Tesserent (ASX:TNT) share price today?
• ASX stock of the day: Ainsworth Game Technology (ASX:AGI) shares rise 11%
• ASX 200 Weekly Wrap: Calm restored to the ASX 200
• Why Afterpay, Piedmont Lithium, ResApp, & Santos are charging higher
• ResApp (ASX:RAP) share price jumps 19% on AstraZeneca deal

Motley Fool contributor Sebastian Bowen 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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The Afterpay Ltd (ASX: APT) share price has slumped 30% from its record all-time highs of $160.05 set on 11 February.

While investors might eye the recent weakness as an opportunity to buy discounted Afterpay shares, here’s what Citi thinks about the Afterpay share price. 

Citi neutral on the Afterpay share price 

Citi believes the latest round of stimulus payments in the United States is a positive for the buy now, pay later (BNPL) sector as it could support an increase in consumer spending. The first round of the US$1.9 trillion relief package is expected to reach bank accounts as soon as this weekend. 

The broker also pointed to data showing that Afterpay’s US website visits grew more than ~91% year-on-year in February, but the growth rate is slowing from ~106% in January. While February figures were good, the broker believes the company is underperforming its rival Zip Co Ltd (ASX: Z1P). 

Taking a look at both company’s half-year results, Zip did appear to deliver higher percentage growth across all key metrics. Afterpay recorded a 106% increase in underlying sales to $9.8 billion, an 80% increase in customers to 13.1 million and a 73% increase in active merchants to 74,700.

On the other hand, Zip delivered a 141% increase in transaction volume to $2,320.6 million, a 217% increase in customers to 5.7 million and an 82% increase in merchants to 38,500. 

As a result, Citi retained a neutral rating with a $124.80 target price. 

The Afterpay share price in 2021

While Zip might be growing faster than Afterpay, the company has several exciting global expansion opportunities to drive its growth and global retail relevance. 

Afterpay is ramping up its in-country and cross-border merchants in Canada. It noted several major retailers either contracted or integrating into Canada. The region currently has an underlying sales run rate of approximately ~$90 million based on January 2021 trading.

Today, Afterpay co-CEO Nick Molnar announced on LinkedIn that the company’s European subsidiary Clearpay would launch across Spain, France and Italy. Afterpay’s half-year results noted that it was working to build the tech stack to launch into 4 new countries, with more than $1 billion pipeline of global merchants in the process of contracting for the EU.  

Afterpay also has a new stand-alone banking app expected to launch in Q1 Fy22. Afterpay Money is a money management app that focuses on providing insights and features to help users manage their money. Users can treat the app like a traditional banking app with features such as a linked debit card and digital wallet. 

More reading

• 5 things to watch on the ASX 200 on Tuesday
• Why did the Afterpay (ASX:APT) share price and 2 other BNPLs fall today?
• ASX 200 recovers, Evolution Mining acquisition, Afterpay sinks
• Why Afterpay, Fortescue, GWA, & Jupiter Mines are dropping today
• ASX 200 down 0.1%: Afterpay sinks, Evolution announces acquisition

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