Square (SQ) Direct Deposit Additions Likely to Increase ARPU - Credit Suisse
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Credit Suisse analyst Timothy Chiodo reiterated an Outperform rating and $270.00 price target on Square (NYSE: SQ) after incorporating the 2020 gross profit mix of Seller and Cash App from Square’s latest investor presentation, including the strong February exit rates for the Seller ecosystem.
The analyst stated "Both ecosystems delivered underlying momentum in terms of large new cohort additions (gross profit by annual cohort) in 2020 vs. 2019. For Cash App, the combination of increasing product attach rates (Cash Card penetration ~25% vs. ~20%+ end 2019) and prospects for further direct deposit (DD) users ahead (i.e., Credit Karma, Boost offerings specific to payroll DD, further DD efforts/incentives, etc.) suggest the potential for ARPU upside medium-term. For Seller, progress with larger sellers (suggestive of lower churn ahead and share gains), plans to roughly ~2x the sales team in 2021, and the potential for new product launches".
Shares of Square closed at $225.50 yesterday.
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