Perlin reiterates an Outperform rating on shares of Square, while raising the price target to $53.00 (from $41.00), just ahead of the payment solutions provider’s 4Q earnings next week.
The analyst is forecasting GPV of $17.9 billion in Q4:17, up 31% y/y, and consistent with Q3:17 growth. As has been the case throughout the year, Perlin anticipates a combination of above-core growth in larger sellers, continued high attachment rates of Square Capital and new product innovation to drive GPV.
“If there is an area where we see upside to our revenue numbers it’s in subscription & services, as this line item has consistently surprised to the upside, driven by a consistent roll out of new products. After inflecting up the last two quarters, we have modeled adjusted revenue growth of 38% y/y, but believe our numbers could prove conservative,” the analyst noted.
Furthermore, “We anticipate a relatively conservative FY18 guide, which we believe will straddle the current consensus, and be in the range of 30%-35% adjusted revenue growth and adjusted EBITDA margins in the 18%-20% range suggesting ~500bps expansion y/y at the mid-point.”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, 5-star analyst Daniel Perlin has a yearly average return of 28.8% and a 87% success rate. Perlin has a 134.2% average return when recommending SQ, and is ranked #36 out of 4750 analysts.
Wall Street is predominantly showcasing positive sentiment on the tech titan, with TipRanks analytics demonstrating SQ as a Buy. Based on 13 analysts polled in the last 3 months, 9 rate Square stock a Buy, 3 issue a Hold, while only one recommends a Sell. However, the 12-month average price target stands at $44.46, marking a slight downside from where the stock is currently trading.