- Shares of Square Inc (NYSE: SQ) has received a price target increase from $255 to $330 by Deutsche Bank. These are the details.
Shares of Square Inc (NYSE: SQ) has received a price target increase from $255 to $330 by Deutsche Bank. And Deutsche Bank is reiterating a “Buy” rating on Square shares.
Deutsche Bank analysts led by Brian Keane are expecting Square’s Cash App to potentially benefit from another stimulus round later this year. While the analysts believe Square might have been a recovery play in 2020, they believe that a bigger story could be expected this year.
“Although benefits from the first round of stimulus have started to fade, Cash App should benefit from the second smaller round starting in 1Q21,” wrote Keane in a research report via Business Insider. “Cash App to benefit from monetizing new users, cross-selling products across the platform, and expansion into new products.”
A number of analysts are concerned about the profit potential of the Cash APp. However, Deutsche Bank believes that the Cash App profit margins will scale over time.
And the Deutsche Bank analysts pointed out that Square’s stock brokerage products has been driving strong results for the top line. Since launching under a year ago, Square added 2.5 million transacting customers. Plus the surge in bitcoin price has also been beneficial for Square as well.
Square started allowing the purchase of cryptocurrency through its Cash App in 2017. And Square also bought $50 million worth of bitcoin.
Keane increased his forecast of Square to “~140% Y/Y primarily due to higher Bitcoin revenue.” But the analysts decreased the company’s gross profit growth “from ~55% Y/Y to ~48% Y/Y due to the lower Seller volumes and Cash App Gross Profit growth.”
Deutsche Bank also forecasted net revenues of $9.49 billion when Square announces earnings on February 23. And Deutsche Bank is expecting a net income of $118 million.
Disclaimer: This content is intended for informational purposes. Before making any investment, you should do your own analysis.