Judging by the amount of traffic different fool.com.au articles generate AfterPay (ASX: APT) is probably the most popular company on the S&P/ ASX200 (ASX: XJO) right now.
And not for nothing either.
The AfterPay share price has gone absolutely gangbusters over the the last 18 months from $5.50 in November 2017 to $25.41 today and according to the professional investment analysts at Goldman Sachs it's got some gas left in the tank.
According to an April 4 2019 research note out of Goldmans, AfterPay's U.S. business is going gangbusters.
"Early signs of success in the US remain strong: APT has experienced a record month of US app downloads, website visitations numbers are growing and it continues to add more retailers. APT will likely need to invest in infrastructure (staff, marketing, customer service, etc.) to support this strong growth and, as a result, our earnings revisions are more muted than our top line upgrades."
As a result of its revised forecasts Goldmans has slapped a $27.15 12-month share price target on AfterPay, which is around 10% above today's price of $25.
It should be noted that Goldman has incorporated some bullish forecasts into its valuation model and even suggests the stock could be worth more if AfterPay adds 9,100 customers a day globally over the second half of fiscal 2019.
It also assumes it could add 9,900 customers a day by fiscal 2020 and 10,400 a day by fiscal 2021 in a bullish case for the business's growth.
At its latest update that included the blockbuster progress at its U.S. business, AfterPay flagged it had added 7,000 customers a day over the Christmas period, so we can see Goldmans expects the U.S. and U.K businesses to juice its growth even further out to 2021.
These aggressive assumptions seem possible if we assume the UK business performs to expectations, but for now it remains a known unknown in a millennial retail market different to Australia.
Finally the cynical side of me also feels it right to point out that Goldmans Sachs has acted as a fee-earning capital markets advisor recently to AfterPay's merger partner Touchcorp and actually helped float it originally.
Goldmans capital markets advisory business and sell side research businesses are of course separate functions, but it's almost unheard of for a sell side brokerage arm to have anything but a positive view on a company that another part of its business earned substantial fees from.
After all, you won't catch the waiter advising you to eat next door.
Overall though, I expect that if Goldmans is close to correct in its forecasts then we'll see the AfterPay share price head higher in time.
If inclined to buy I'd only make it a very small part of a balanced investment portfolio considering the risks of a slowdown in Australia, or the UK market not proving as strong as forecast.
