Square (SQ) a Top Pick at Mizuho But Also a Takeover Candidate

September 14, 2016 7:29 AM EDT
Get Alerts SQ Hot Sheet
Price: $11.20 -0.88%

Rating Summary:
    9 Buy, 15 Hold, 0 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 14 | Down: 19 | New: 11
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Mizuho Securities analyst Neil Doshi reiterated a Buy rating and $16 price target on Square (NYSE: SQ), calling it one of our favorite stocks in the SMID Cap sector given strong execution, a solid management team, deep moats around its 2 million SMB customers, and promising potential for high-margin revenue from software and services. The firm also views it as a takeover candidate.

On takeover potential, Doshi commented, "Square is also highly likely to be acquired, in our view. Given the company’s strong growth (though off of a small base), scale with over two million SMB merchants, and solid take rates and transaction margins, we believe that Square would make an attractive target for several fin-tech companies, like PayPal (NASDAQ: PYPL), Alibaba (NYSE: BABA), American Express (NYSE: AXP), Chase (NYSE: JPM) and other firms. We could see a scenario where Square could also be a target for Google (NASDAQ: GOOGL) as it builds out its payment platform and can marry payments with Google Enterprise solutions. However, valuation is rich, and the company does not have a proven track record of historic profitability."

For an analyst ratings summary and ratings history on Square click here. For more ratings news on Square click here.

Shares of Square closed at $11.23 yesterday.

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