Search ASX code:
Generic filters

Want to invest ethically for a brighter future?
(but still make lots of money)?

Want to invest ethically for a brighter future? (but still make lots of money)?

 Take Rask’s FREE Ethical Investing course today.

  • Online & 100% free
  • ETFs, shares & Super
Want to invest ethically for a brighter future? 
(but still make lots of money)?

 Take Rask’s FREE online Ethical Investing course.

Afterpay (ASX:APT) share price on watch: Broker cuts expectations

The Afterpay Ltd (ASX: APT) share price is going to be on watch today after the buy now, pay later operator suffered a cut of expectations from a broker, Morgan Stanley.

Why is the Afterpay share price on watch?

Firstly, I think it’s important to note that the Afterpay share price is still rated as a buy. However, the key statistic is that the Afterpay share price target has been dropped from $159 to $149. A price target is where the broker thinks the share price will be in 12 months from now. So Morgan Stanley still thinks that the Afterpay share price will rise by 24% over the next year.

A key part of the more cautious outlook by Morgan Stanley, is due to the increased to rising competition in the space which could lead to lower margins for Afterpay over time, according to reporting in the Australian Financial Review.

The big name to announce it’s entering the BNPL space is Commonwealth Bank of Australia (ASX: CBA), which is what Morgan Stanley noted about competition.

From the middle of 2021, CBA will be offering BNPL to its customers. There will be no ongoing fees and no additional costs businesses – standard merchant fees apply.

It can be used anywhere that Mastercard is accepted, up to a limit of $1,000. It can be used for everyday spending transactions of less than $100. There will be four fortnightly instalments for transactions higher than $100.

Late fees of $10 will be charged for each missed instalment repayment. CBA said there are caps so that the total charges are limited.

As a result of CBA’s entry, Morgan Stanley has reduced its expectations of Afterpay’s merchant margins, though the company could reduce the merchant fee pressure with transaction processing costs.

The expected growth rate of the revenue means the broker thinks it’s worth 24 times FY22’s estimated earnings, according to reporting by the AFR. However, the broker did point out that it’s still good value compared to marketplace offerings from big tech.

Summary thoughts

Afterpay does face a lot of competition, not just from its ASX peers like Zip Co Ltd (ASX: Z1P), but also from large northern hemisphere players like Affirm Holdings Inc (NASDAQ: AFRM) and Paypal Holdings Inc (NASDAQ: PYPL).

But, despite the still-positive outlook for the Afterpay share price, it’s not one of the ASX growth shares that I’m looking for with my portfolio because of that rising competition and potential margin pressure down the line.

Is BNPL the opportunity of a lifetime or is the sector a ticking time bomb?

Rask's analyst has just finished a 7,500-word report, The Ultimate BNPL Sector Report, taking a deep dive into this booming ASX sector. It shines a spotlight on each of the major players. You can get the full analyst report for FREE by CLICKING HERE NOW or entering your email below.

Note: the report is 100% free.

Unsubscribe anytime. Read our TermsFinancial Services GuidePrivacy Policy. We’ll never sell your email address. Our company is Australian owned.

Afterpay, Zip Co, Sezzle…

Is BNPL the opportunity of a lifetime or is the sector a ticking time bomb?

Rask's analyst has just finished a 7,500-word report, The Ultimate BNPL Sector Report, taking a deep dive into this booming ASX sector. It shines a spotlight on each of the major players. You can get the full analyst report for FREE by CLICKING HERE NOW.

Note: the report is 100% free.

At the time of publishing, the author of this article does not have a financial or commercial interest in any of the companies mentioned.

Information warning: The information on this website is published by The Rask Group Pty Ltd (ABN: 36 622 810 995) is limited to factual information or (at most) general financial advice only. That means, the information and advice does not take into account your objectives, financial situation or needs. It is not specific to you, your needs, goals or objectives. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. Please read our Terms and Conditions and Financial Services Guide before using this website. The Rask Group Pty Ltd is a Corporate Authorised Representative (#1280930) of AFSL #383169.

Keep reading:

Rask Media’s Ultimate BNPL Sector Report

Afterpay, Zip, Sezzle… is this the opportunity of a lifetime? Or is BNPL a ticking time bomb? This 7,500-word analyst report takes a deep dive into the BNPL sector and shines a spotlight on each of the major players in this booming market. 

Unsubscribe anytime. Read our TermsFinancial Services GuidePrivacy Policy. We’ll never sell your email address. Our company is Australian owned.

As we emerge from COVID-19, some tech companies are growing faster than ever. Rask’s investment analysts have identified 3 growth stocks set to benefit. Big time.

Enter your email below to access this report for free, including the names, ticker codes and analysis.

Unsubscribe anytime. Read our TermsFinancial Services GuidePrivacy Policy. We’ll never sell your email address. Our company is Australian owned.