The Afterpay Touch Group Ltd (ASX: APT) share price has been a big mover on the eve of the payment solutions company's half-year earnings release.
In afternoon trade Afterpay Touch's share price is up almost 7% to $7.41, which brings its seven-month return to a staggering 175%.
Why are its shares higher today?
Investors appear to be betting that Afterpay Touch will follow in the footsteps of fellow market darling A2 Milk Company Ltd (ASX: A2M) by delivering a result ahead of the market's expectations on Thursday.
This morning a2 Milk Company blew the market away with its first-half result, sending its shares 26% higher.
What does the market expect from Afterpay Touch?
According to a note out of Goldman Sachs, its analysts expect the company to post half-year revenue of $60.8 million and earnings before tax, depreciation, and amortisation (EBTDA) of $11.3 million.
By comparison, management has provided guidance for sales of $60 million and EBTDA between the range of $11 million and $12 million.
On the bottom line the broker has estimated normalised half-year net profit after tax of $5.2 million, which equates to earnings per share of 2.2 cents.
For the full-year, Goldman is looking for revenue of $133.3 million, up 359% year-on-year, and EBTDA of $25.6 million. This will be a significant increase on the EBTDA of $5.4 million it achieved a year earlier.
Should you invest?
Whilst I think that Afterpay Touch could outperform expectations tomorrow, I wouldn't rush in to buy its shares today.
After all, we have seen with WiseTech Global Ltd (ASX: WTC) today what happens when richly valued tech shares don't deliver better-than-expected growth.
In light of this, I think the prudent thing to do is to wait patiently for Afterpay Touch to release its results and respond accordingly to them.
