Stifel’s top analyst Scott Devitt predicts Square (SQ) will deliver solid results for the fourth quarter and then bring the momentum into 2019 as well. The analyst cites healthy TPV growth, emerging business with Subscription and Services and continued innovation. Devitt believes investors may be underappreciating the monetization and growth potential for certain areas like Square Cash as well as newly-launched Square Terminal, a small machine that takes payments and prints receipts. The positive innovation and success from Square leads Devitt to reiterate a Buy rating with a $95 price target.
According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, 5-star analyst Scott Devitt has a yearly average return of 18.3% and a 64% success rate. Devitt has a 52% average return when recommending SQ, and is ranked #68 out of 5,124 analysts.
“Square’s growing ecosystem of products and services should also allow for further wallet share gains among existing sellers and enable the company to more adequately address larger merchants. While the application’s initial features were primarily geared towards underbanked consumers, we believe some of the newer features, such as Cash Boost, are broadening the app’s appeal and driving greater frequency/usage,” Devitt explains.
“We believe Square will also start monetizing Cash Boost overtime by allowing other retailers to advertise their products and services through Cash App’s rewards/loyalty program, given Square’s unique ability to track purchasing activity in real-time. With the continued adoption of Square’s debit cards, we believe the company could start tailoring its Cash Boost offerings by geography and user, which would further enhance the customer experience, drive increased engagement, and enable retailers to more effectively target consumers,” Devitt concludes.
Not every analyst, however, is on the Square flow. TipRanks reviewed ratings from 29 analysts on Wall Street and out of the pool 15 are bullish, 12 are sidelined and 2 are bearish. The consensus price target is $88.42, which shows a 39% upside. (See SQ’s price targets and analyst ratings on TipRanks)