As with many of 2020’s high-flyers, Square’s (SQ) share gains are much harder to come by in 2021. In fact, in sharp contrast to last year’s impressive performance, the stock remains almost flat year-to-date.
That said, the adoption of digital payment enablers is a trend firmly on the rise and Square is set to continue reaping the rewards.
At least that is the opinion of Tigress Financial analyst Ivan Feinseth. The analyst recently reiterated a Buy rating on SQ stock and set a $295 price target for the shares. Investors could be pocketing gains of ~40%, should Feinseth’s target be met over the next 12 months. (To watch Feinseth’s track record, click here)
So, what does Feinseth particularly like about Square, then?
“SQ remains well-positioned to benefit from current economic trends in both the current and the post-pandemic economic environment. SQ’s innovative capabilities will continue to drive the introduction of new products that take it beyond payments and continue to drive growth, increasing Return on Capital, greater Economic Profit, and accelerating shareholder value creation,” the 5-star analyst explained.
Key to Square’s growth has been its Seller engagement and the increasing adoption of its mega successful peer-to-peer Cash App. Both helped the trailing twelve month’s revenue (ending in the March quarter), increase by 156.54% year-over-year from $5.14 billion to $13.17 billion. Feinseth expects the growth to continue over the next 12 months with an additional uptick of 99.28% to $21.23 billion.
However, its not just these elements which will fuel the growth, as Feinseth notes above, Square is looking to expand beyond the world of payments.
The recent $300 million acquisition of Jay-Z’s music streaming service Tidal represents such a move, one which Feinseth thinks has the ability “to help artists monetize their content in the same way that SQ initially began by helping small businesses monetize their customer base by implementing payment and other ongoing business management services.”
There have been other strategic plays which have helped expand the company’s services portfolio.
Following an initial investment made in March 2020, earlier this month, Square took part in another round of investment in health device creator Oura Health, maker of the Oura Ring fitness tracker.
There were some big acquisitions last year, too. Feinseth notes the purchase of Credit Karma’s tax preparation business, operations management platform Stitch Labs, solar parks operator Sky Solar Holdings, Spanish peer-to-peer payment app Verse Technologies, Italy’s mobile digital payment platform Satispay SpA, and AI (Artificial Intelligence) technology developer Deep Learning Technologies.
So, there you have Tigress Financial’s bullish view, but what does the rest of the Street make of Square’s prospects? 19 Buys, 9 Holds and 3 Sells culminate in a Moderate Buy consensus rating. At $283.56, the average price target suggests one-year upside of 35%. (See Square stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
