UPDATE: Cowen Upgrades Square (SQ) to Outperform, 'Buy Now'
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Cowen analyst George Mihalos upgraded Square (NYSE: SQ) from Market Perform to Outperform with a price target of $343.00 (from $266.00).
The analyst comments "We are upgrading the shares of SQ to Outperform and raising our PT to $343 from $266. SQ boasted best of breed industry growth prior to the APT.AX acquisition. Post deal and even pre-synergies, we see the company delivering pro-forma gross profit growth in excess of 30%. The addition of APT.AX at this stage looks to us like a 1+1=3 scenario, accelerating Seller gross profit growth above the low 20% rate we’ve forecasted through 2023 and furthering Cash App user monetization, creating a greater halo effect across both segments. The deal instantly increases SQ’s global (pro-forma >10% of 21E gross profit) and eComm footprints (Seller >50% eComm), both priorities for the company while potentially opening the door to cross-sell Seller solutions into more of an enterprise client base longer-term. The inclusion of BNPL aids SQ on its journey toward super-app status for Cash App (adding a robust consumer lending solution) and creates a one-stop shop, leveraging SQ’s debit offerings. While appropriately sizing revenue synergies at this juncture is premature we note even modest penetration of APT’s solutions into SQ’s Seller GDV base alone, as denoted in Figure 4, could yield material incremental gross profit growth, let alone domestic and international cross-sell opportunities for Seller and Cash App growth acceleration. We see multiple sources of future revenue and gross profit upside relative to current pro-forma estimates."
Shares of Square closed at $272.38 yesterday.
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Create E-mail Alert Related CategoriesAnalyst Comments, Analyst PT Change, Hot Comments, Hot Upgrades, Upgrades
Related EntitiesCowen & Co, Definitive Agreement
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