Morgan Stanley assesses the entry of Commonwealth Bank ((CBA)) into the Australian BNPL market has put the focus on price competition. As a result, Australian merchant fee estimates are reduced for Afterpay.
Nevertheless, the company is expected to maintain a premium to other payment methods, as while its fees are high for a payment solution they are low for a marketplace.
Group merchant margins are reduced by -13 basis points for FY23 estimates and Australian merchant margins by -60 basis points. Target is reduced to $149 from $159. Overweight rating retained. Industry view: In-Line.
Sector: Software & Services.
Target price is $149.00.Current Price is $118.48. Difference: $30.52 – (brackets indicate current price is over target). If APT meets the Morgan Stanley target it will return approximately 20% (excluding dividends, fees and charges – negative figures indicate an expected loss).
