The Afterpay Touch Group Ltd (ASX: APT) share price has bounced back after a series of declines and is notably higher on Tuesday afternoon.
At the time of writing the payments company's shares are up over 7% to $21.78.
Why is the Afterpay Touch share price charging higher?
With no news out of the company or broker notes that I'm aware of, today's gain appears to be a case of bargain hunters swooping in to take advantage of a sharp decline in its share price.
After all, prior to today, the company's shares were down by almost 30% from their all-time high of $28.70.
Why have its shares been sold off?
Afterpay Touch's shares came under significant selling pressure this month after it advised that it had received a notice from AUSTRAC.
That notice required the payments company to appoint an AUSTRAC-authorised external auditor to carry out an audit in respect to its Anti-Money Laundering/Counter Terrorism Financing (AML/CTF) compliance.
And although Afterpay welcomed the opportunity to continue to work closely and constructively with AUSTRAC, some investors appeared concerned that the financial intelligence agency could order changes that impact its business model, and hit the sell button in a panic.
Whilst it is unclear what will become of the audit, one broker that remains positive on Afterpay Touch is Goldman Sachs.
Its analysts appear to believe this share price weakness is a buying opportunity for investors and have retained their conviction buy rating and $27.10 price target on the company's shares.
Even after today's solid gain, this price target implies potential upside of ~25% for the company's shares over the next 12 months.
Whilst Goldman acknowledges that there is a risk that the AUSTRAC audit could have a material impact on the Afterpay business model, it continues to see the risk/reward on offer as compelling. This is due to its belief that the company has an opportunity to replicate its ANZ success in the massive US market.
Elsewhere in the buy now pay later industry, the shares of both FlexiGroup Limited (ASX: FXL) and Zip Co Ltd (ASX: Z1P) are pushing higher with Afterpay Touch this afternoon.
