RBC Capital Markets is expecting Afterpay’s first half earnings result will come in below consensus, adding the ‘buy now, pay later’ provider is under pressure to beat high market expectations.
The broker has a ‘sector perform’ rating on the stock and a price target of $30.00, 8.5 per cent below its Wednesday close.
“Along with the broader market, we expect Afterpay to report continued strong momentum at the 1H20e result,” said analyst Tim Piper.
“Our forecasts imply gross merchandise volume accelerated month-on-month in December to $1.1 billion, while our EBITDA forecasts sit below consensus due to higher OPEX.
“A continued acceleration in US app downloads in the month of December implies that customer growth rates remained very strong through the end of 1H20.”
The broker noted strong momentum through the end of 2019 boded well for continued sales momentum through the remainder of the financial year, but suggested its price looked close to fully valued coming into earnings season.
“With market expectations high, we feel a beat across key growth metrics is needed to support the current strength in the share price,” said Mr Piper.