Square (SQ) PT Lowered to $75 at KeyBanc After Caviar Divestiture

KeyBanc analyst Josh Beck cut the price target on Square (NYSE: SQ) to $75.00 (from $100.00) after building the Caviar divestiture into his model showing 2020 pro forma (PF) margins flattish vs. market expectations of close to ~200 bps of expansion. The net effect is adjusted EBITDA of $565M in 2020 excluding Caviar vs. current estimates of $627M including Caviar.

The analyst stated "While sentiment may languish in the NT, which prompts a lower price target, we see increased investment as a prudent strategic move as we see two clear 2020 catalysts: 1) improving GPV trends; and 2) growing Cash App monetization". No change to the Overweight rating.

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