Shares in glamour tech company Afterpay Touch Group Ltd (ASX: APT) are soaring higher today following an announcement this morning and a broker upgrade.
Afterpay shares were trading up as much as 15% this morning following the release of an update in relation to Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) matters.
What Did The Update Say?
The announcement advised that the confidential interim report by external auditor Mr Neil Jeans had now been provided to AUSTRAC. The interim report is said to not contain any recommendations as these will be left for the final report.
AUSTRAC stands for Australian Transaction Reports and Analysis Centre and is an Australian government financial intelligence agency set up to monitor financial transactions in order to identify money laundering, organised crime, tax evasion, welfare fraud and terrorism.
Mr Jeans also advised that work is now underway to complete the assessment of, and test the implementation and compliance with, the various AML/CTF programs in place during and after the notice period.
Afterpay also attempted to reassure investors by reiterating that it had not identified any money laundering or terrorism financing activity via its systems to date.
Within today’s announcement the company said: “Afterpay’s systems include several features that help to control our money laundering and terrorism financing risk, including the implementation of strict spending limits. Afterpay is used by our customers for discrete, small value (around $150 average), non-cash transactions and does not allow for international funds transfers.”
“Afterpay recognises the important work undertaken by AUSTRAC. The Company reiterates that it welcomes the opportunity to continue to work cooperatively with AUSTRAC and will approach this formal process as an opportunity to ensure that our AML/CTF compliance is robust,” it added.
Goldman Sachs Upgrades To Buy
The announcement released this morning certainly contained no information that would warrant a 15% rally in the share price. It’s more likely that a note out of Goldman Sachs is largely responsible for this morning’s price surge.
Analysts at Goldman Sachs have slapped a buy rating on Afterpay shares and placed it on its conviction list with a new price target of $42.90. This price target represents a 35% premium to yesterdays closing price.
When a big investment firm like Goldman Sachs substantially increases its price target for a company, it can have a meaningful impact on the share price as they are seen by many as the gold standard of investment analysis.
Generally speaking, I would be wary of chasing stocks for fear of missing out. There are plenty of opportunities on the ASX and we only need to get in on a small fraction of them to earn above average returns from the share market.
As investment legend Peter Lynch would say, you can’t kiss all the pretty girls.
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At the time of publishing, Luke has no financial interest in any companies mentioned.