The big test of Australia’s still frothy listed tech sector intensifies from today as investor luvvies like Afterpay Touch, Zip, and WiseTech Global come under renewed pressure from suddenly sceptical traders.
Pursuant to yesterday note, in which the broker reiterated its Sell rating for Afterpay Touch based on a perceived high credit risk for the BNPL sector, and higher still for Afterpay individually, the broker has increased its sales forecasts following yesterday's update from management.
While a young Afterpay Touch failed to comply fully with compliance legislation, those issues have been addressed and the independent auditor has found the company's monitoring "effective, efficient and intelligent".
Morgan Stanley considers the stock oversold amid concerns around the payments review announced by the Reserve Bank of Australia. The RBA will recommence a review of card payment regulations in early 2020.
Citi has initiated coverage of Afterpay Touch with a Neutral rating and $33.70 price target. The analysts hold the view the market might be underestimating the growth levers embedded inside this business model.