Square Uses Investor Day To Play Up Magnitude Of Opportunities; BTIG Downgrades On Valuation

BTIG's Mark Palmer downgraded shares of Square Inc SQ from Buy to Neutral after the stock hit his $20 price target.

Palmer's downgrade and removal of Square's price target comes at a time when Square "impressed" him with solid execution over the past few quarters, including an acceleration of growth within the subscription and service-based segment. But at the end of the day, Square's stock gained 50 percent in 2017 alone and nearly 140 percent since June, which implies fair valuation.

Investor Day Highlights

Square on Tuesday hosted an investor day presentation in which management touted its huge market opportunity ahead, brand strength and bundle of services. However, the analyst needs to see additional evidence of execution and sustainability before he could become bullish again.

Palmer also highlighted an ongoing debate among investors and analysts. Specifically, Square's CFO Sarah Friar discussed the magnitude of Square's opportunities in each business segment. This has been a "source of some contention" as some believe its total addressable market is lower than the company's own assertions.

Bottom line, Palmer finds it hard to justify buying shares again at its now "much fuller" valuation. Nevertheless, the analyst would likely become a buyer again if a pullback were to occur.

The stock traded at $19.79, down about 2.7 percent Wednesday morning.

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