Jed Kelly Shares Behind-the-Scenes Insights on Square Inc (SQ) After Internet Bus Tour Meeting

Oppenheimer's Jed Kelly sees SQ as a small-to-medium businesses platform ready to penetrate multiple revenue channels.


Square Inc (NYSE:SQ) shares have shot up almost 24% in value ever since the tech player delivered third quarter earnings just a week and a half ago.

After hosting a visit at the company’s headquarters, Oppenheimer analyst Jed Kelly is out with insights from his West Coast Internet Bus Tour, finding the commentary to further bolster his bullish sentiments on Square.

On the heels of discussions with the tech team’s management, the analyst maintains an Outperform rating on SQ stock. (To watch Kelly’s track record, click here)

Notably, regarding Square’s international trajectory, this is not a matter of “‘if but ‘when,'” asserting: “Management believes SQ doesn’t need to be first to market to gain share and can penetrate more markets by providing the best and most comprehensive product. Canada and Australia are progressing well, with Canada providing the most near-term upside, in our view.”

The Square team cares about CRM prospects that have been bringing to the table an average of 10 times ROI for sellers, while also highlighting attention to stirring up growth from core domestic payments, broadening International opportunity, Capital, as well as Square Cash. Additionally, the analyst notes there was some commentary circling Bitcoin as an opportunity.

Kelly writes, “In our view, Capital represents an enormous growth opportunity, especially if the company chooses to underwrite loans more broadly across the credit spectrum. The ILF is a time-consuming process but, if attained, should provide Capital with more product flexibility, in our view. Products such as invoices are gaining traction, and ‘Square Cash’ offers the opportunity to serve the under-banked millennial population, and App store downloads indicate it’s effectively competing against larger P2P networks.”

For the analyst, management made it very clear that Square has the capacity to break through various revenue channels, all while showcasing that the tech player appeals to small-to-medium businesses as a platform. In other words, Kelly contends, this is “not just another payments solution provider with slick hardware.”

The tech stock has grabbed some cautious optimism on the Street, as according to TipRanks, based on 23 analysts polled in the last 3 months, 13 rate a Buy on Square stock while 10 maintain a Hold. The 12-month average price target stands at $37.50, marking a nearly 18% downside from where the stock is currently trading.  

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