Why Square Is Firmly Among Top Battleground Stocks After Earnings and Analyst Updates

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Square Inc. (NYSE: SQ) just became a confirmed battleground stock in which it is unclear if the bulls or the bears are going to win. The dust has to settle here, but Square was a definite beneficiary of the bitcoin and cryptocurrency news flows of late 2017, and now the earnings report has seen a relatively muted reaction from investors.

24/7 Wall St. has included some highlights from the report, as well as what analysts are saying after the fact.

The payment processor posted $0.08 in earnings per share (EPS) on $283 million in adjusted revenue, compared with consensus estimates from Thomson Reuters that called for $0.07 in EPS on $266.26 million in revenue. The fourth quarter of last year had a net loss of $0.04 per share on revenue of $451.92 million.

During the quarter, gross payment volume (GPV) was $17.9 billion, up 31% year over year. The company said it continues to see strength in larger sellers, with GPV from this segment growing 44% year over year and representing 47% of total GPV.

At the same time, subscription and services-based revenue was $79 million, up 96% from the fourth quarter of 2016, an acceleration from year-over-year growth of 84% in the third quarter of 2017. Instant Deposit, Caviar and Square Capital contributed the majority of subscription and services-based revenue.

In terms of guidance for the first quarter, the company expects to see EPS in the range of $0.03 to $0.05 and adjusted revenues between $290 million and $295 million. The consensus estimates call for $0.08 in EPS and $271.86 million in revenue for the quarter.

Short interest for Square for the period ended February 15 totaled 34.15 million shares, with 2.2 days to cover, down from 34.92 million. The total shares short make up about 12.9% of the entire float.

Analysts have very mixed views, but they all raised their price targets. The new consensus target after earnings is still likely to rise as more analyst calls come in, but that was last seen at about $47 on the Thomson Reuters sell-side consensus. That consensus had been just under $43 just ahead of earnings, and it was $41.50 a month ago.

Here’s what analysts had to say about Square after earnings:

  • Barclays raised its price target to $51 from $43.
  • Canaccord Genuity raised its price target from $33 to $40.
  • Cantor Fitzgerald maintained an Overweight rating and raised its target to $51 from $41.
  • Cowen raised its price target to $39 from $36.
  • Craig Hallum raised its price target to $41 from $33.
  • Credit Suisse maintained a Neutral rating but raised its target to $44 from $37.
  • Keefe Bruyette & Woods raised its price target from $44 to $50.
  • Mizuho raised its price target to $50 from $40.
  • Needham reiterated a Buy rating and raised its target to $55 from $45.
  • Stifel raised its price target to $46 from $37.
  • SunTrust Robinson Humphrey raised its price target to $42 from $35.
  • Susquehanna reiterated a Positive rating and raised its price target to $53 from $51.
  • Wedbush Securities maintained a Neutral rating and raised its target from $37 to $50.

Shares of Square were last seen at $46.13 apiece, with a consensus analyst price target of $43.16 and a 52-week range of $16.11 to $49.56.