Here's what Citi thinks about the Afterpay (ASX:APT) share price

The Afterpay (ASX: APT) share price is down 30% from its record highs in February. Here's what Citi thinks about the BNPL company today

| More on:
ASX shares broker downgrade three buttons indicating thumbs up, neutral and thumbs down broker ratings on ASX share market

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Afterpay Ltd (ASX: APT) share price has slumped 30% from its record all-time highs of $160.05 set on 11 February.

While investors might eye the recent weakness as an opportunity to buy discounted Afterpay shares, here's what Citi thinks about the Afterpay share price. 

Citi neutral on the Afterpay share price 

Citi believes the latest round of stimulus payments in the United States is a positive for the buy now, pay later (BNPL) sector as it could support an increase in consumer spending. The first round of the US$1.9 trillion relief package is expected to reach bank accounts as soon as this weekend. 

The broker also pointed to data showing that Afterpay's US website visits grew more than ~91% year-on-year in February, but the growth rate is slowing from ~106% in January. While February figures were good, the broker believes the company is underperforming its rival Zip Co Ltd (ASX: Z1P). 

Taking a look at both company's half-year results, Zip did appear to deliver higher percentage growth across all key metrics. Afterpay recorded a 106% increase in underlying sales to $9.8 billion, an 80% increase in customers to 13.1 million and a 73% increase in active merchants to 74,700.

On the other hand, Zip delivered a 141% increase in transaction volume to $2,320.6 million, a 217% increase in customers to 5.7 million and an 82% increase in merchants to 38,500. 

As a result, Citi retained a neutral rating with a $124.80 target price. 

The Afterpay share price in 2021

While Zip might be growing faster than Afterpay, the company has several exciting global expansion opportunities to drive its growth and global retail relevance. 

Afterpay is ramping up its in-country and cross-border merchants in Canada. It noted several major retailers either contracted or integrating into Canada. The region currently has an underlying sales run rate of approximately ~$90 million based on January 2021 trading.

Today, Afterpay co-CEO Nick Molnar announced on LinkedIn that the company's European subsidiary Clearpay would launch across Spain, France and Italy. Afterpay's half-year results noted that it was working to build the tech stack to launch into 4 new countries, with more than $1 billion pipeline of global merchants in the process of contracting for the EU.  

Afterpay also has a new stand-alone banking app expected to launch in Q1 Fy22. Afterpay Money is a money management app that focuses on providing insights and features to help users manage their money. Users can treat the app like a traditional banking app with features such as a linked debit card and digital wallet. 

More on Share Market News

Broker written in white with a man drawing a yellow underline.
Broker Notes

Brokers name 3 ASX shares to buy today

Here's why brokers are feeling bullish about these three shares this week.

Read more »

Woman with a scared look has hands on her face.
Broker Notes

Bapcor shares fell more than 30% yesterday. Should investors buy in the dip?

Is this a value opportunity?

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Broker Notes

Broker raises price targets on 2 ASX 200 shares to buy

Ord Minnett has just upped its 12-month share price targets on 2 buy-rated ASX 200 stocks.

Read more »

Man with rocket wings which have flames coming out of them.
Share Gainers

Guess which ASX All Ords stock just rocketed 34% on strong earnings growth

Investors just sent this ASX All Ords stock surging 34%. Here’s what’s happening.

Read more »

A male investor wearing a blue shirt looks off to the side with a miffed look on his face as the share price declines.
Share Fallers

Why DroneShield, Gentrack, Metals X, and Northern Star shares are tumbling today

These shares are ending the week in the red. But why?

Read more »

A businessman looking at his digital tablet or strategy planning in hotel conference lobby. He is happy at achieving financial goals.
Share Gainers

Why Dimerix, Newmont, Regal Partners, and Titomic shares are storming higher

These shares are having a good finish to the week. Let's see why.

Read more »

Man drawing an upward line on a bar graph symbolising a rising share price.
Broker Notes

Morgans says these ASX can rise 30% to 50%

The broker has good things to say about these shares.

Read more »

Two businessmen look out at the city from the top of a tall building.
Broker Notes

2 ASX REITs to buy in July: expert

Is it time to consider ASX REITs?

Read more »