Top blogger Bill Maurer is encouraging investors to buy Square (SQ) shares after the stock fell around 7% amid a market selloff and a drop in price target from Stifel analyst Scott Devitt. Maurer notes that while Devitt did cut its price target from $100 to $95, the analyst still reiterated a Buy rating and with the stock currently selling for $60.78, it’s easy to see the analyst does have hope for the future. Maurer suggests Square’s balance sheet remains strong with around $1.8 billion in cash and investments with just about $1 billion in debt. (To watch Maurer’s track record, click here)
“One of the things I like most about Square is that it continues to beat estimates and raise guidance. […] The company has lost money on a GAAP basis so far this year, but that’s mainly due to investments in future growth. Q3 2018 did see a GAAP profit, however,” Maurer said.
The blogger looks back to the fourth quarter of 2017 when Square management forecasted adjusted revenue to be between $1.30 billion and $1.33 billion and new guidance calls for an adjusted top line of between $1.569 billion to $1.574 billion.
“Investors that have followed Square are used to revenue guidance being raised quite often. As we close out 2018, I’m currently looking at estimates for next year, and they have certainly risen over time. On March 1 of this year, the street was looking for adjusted revenues of $1.69 billion in 2019. The current estimate stands at $2.25 billion, and it certainly would not surprise me to see a higher number when all is said and done,” Maurer explains his position.
The blogger refers back to a couple of years ago when shares of Square were one of the market’s biggest winners. Now that there’s a market dip, Maurer recommends taking advantage of it and buying the stock.
“The payment company has seen a significant pullback in recent months, yet it continues to beat estimates every quarter and raise its revenue guidance time after time. The average price target remains in the mid $80s, so analysts see the name heading much higher. With a strong balance sheet helping to foster future growth investments, Square is set up for a nice future,” Maurer concludes.
The Street consensus rating for Square is Moderate Buy, according to TipRanks analytics. 29 analysts rated SQ and out of the ring 15 are bullish, 12 are sidelined and 2 are bearish. The consensus price target of $88.42 shows an upside of nearly 46%. (See SQ’s price targets and analyst ratings on TipRanks)