The Afterpay Touch Group Ltd (ASX: APT) share price is up 0.6% on a day when the broader S&P/ ASX200 (ASX: XJO) has shed 1.4% on the back of weak manufacturing data out of the US suggesting it's being hurt by its trade dispute with China.
Afterpay has not released any specific news to the market today, but has enjoyed a couple of fawning broker ratings from Goldman Sachs and Bell Potter over the last month , both of whom slapped $42.90 and $41.61 price targets on the business respectively.
Both capital markets middle men have also earned capital raising or advisory fees from Afterpay in the past and will be shopping around for more work going forward.
In fairness Afterpay's blockbuster growth speaks for itself and today's valuation will be justified if it succeeds in stitching up the giant US and UK buy-now-pay-later markets.
Recently it launched its UK doppelgänger Clearpay in what's a competitive market with well funded rivals including Klarna that reportedly has millennial stalwarts like TopShop, ASOS, and JD Sports already signed up.
Some retailers like JD Sports will offer multiple spread payment options as far as I know.
This week Clearpay announced that FootLocker has gone live in the UK and Clearpay reportedly clocked more than 200,000 active customers in its first 15 weeks trading in the UK.
Notably, this is more than the runaway train US business at the same-time post launch.
Competition threatening margins appears to be the main risk for Afterpay, but markets as large as the US and UK are not winner takes all.
In other words there should be room for a couple of successful players given the potential size of the markets once you account for the potential of the buy-now-pay-later sector to branch out horizontally across services businesses (flights, dentists, painters, even dinner dates at restaurants,etc) on top of physical retail.
The stock may have room to climb higher yet.
