This is another stock that came out with big fanfare but has done poorly. Square Inc. (NYSE: SQ) develops and provides payment processing, point-of-sale (POS), financial, and marketing services worldwide. It provides Square Register, a POS software application for iOS and Android, which enables sellers across a range of business types to itemize products or services for faster checkout; Square Analytics, which shows its sellers how their businesses are performing; Instant Deposit service, which sends funds from a sale immediately to a seller’s bank account; and Square Reader for magnetic stripe cards, EMV chip cards and NFC, which connects wirelessly to mobile devices.
The company also provides Square Capital, a financial service product, which provides merchant cash advances to pre-qualified sellers; Square Customer Engagement, a marketing service product; and Caviar, a food delivery service.
The company is run by Jack Dorsey, who also has his hands full with another company on the Wedbush list. The analysts say flat out that the company is a rapidly growing business that may never reach profitability. They also note that while the 35% interest rate on Square’s loans may still be legal, they see further scrutiny based on recent U.S. Department of Treasury comments.
The Wedbush team rates the stock Underperform and has an $8 price target. The consensus target is $13. Shares closed Tuesday at $9.57.
The stock was hammered again after reporting earnings and user numbers came in below expectations. Twitter Inc. (NASDAQ: TWTR) is either a total value tech buy or caught in a death spiral depending on who you ask on Wall Street. High multiple valuations and overall terrible negative market sentiment has trampled the stock and made it a favorite target of short sellers.
Many Wall Street firms have given up on the Twitter story, which does make it a solid contrarian play for some. The Wedbush team does feel that company’s large user base and what they call “first mover” status helps to thwart competition, but they feel that the consumer value proposition is incomprehensible. With stagnant monthly active users, and a struggle to grow advertising revenue, they also note that the service is difficult to use. They note too that the company has made little progress in making the service easier for beginners.
The stock is rated Neutral, but Wedbush did post a $20 price objective. The consensus target is actually lower at $18.38. Shares closed Tuesday at $15.
This is another stock momentum traders have set sail on, and the volatility has been a roller-coaster for shareholders. Workday Inc. (NYSE: WDAY) is a leading provider of enterprise cloud applications for finance and human resources. Workday delivers financial management, human capital management and analytics applications designed for the world’s largest companies, educational institutions and government agencies.
The analysts cite the aggressive sales tactics at Oracle in keeping clients from moving to another vendor as a key reason for concern. They also think that management commentary and guidance may point to activity slowing. They don’t seem to think the company can slow the deceleration in business, and they think risk/reward is skewed to the downside.
The Wedbush rating on the stock is Underperform, with a $63 target, while the consensus price objective is $78.94. The shares closed Tuesday at $81.32.
Again, the Wedbush team is not pounding the table and screaming sell, as only two of these are ranked Underperform with lower price targets. They just think there are much better opportunities than these five stocks right now. It’s possible their views could change if current metrics turn better.