Afterpay has launched one-time cards for use at non-integrated merchants such as Amazon. UBS believes this represents an evolution in the company’s revenue model, from merchant fees to affiliate marketing.
The broker considers this a positive development and increases medium term sales assumptions in the US by 29%. The base case now assumes $70bn in underlying sales in existing markets and a further $13bn in sales in new markets by FY25.
The re-evaluation of the sales outlook drives an increase in the target to $42 from $37. UBS maintains a Sell rating on valuation grounds.
Sector: Software & Services.
Target price is $42.00.Current Price is $119.30. Difference: ($77.30) – (brackets indicate current price is over target). If APT meets the UBS target it will return approximately -184% (excluding dividends, fees and charges – negative figures indicate an expected loss).