Market Overview

KBW On Square: Waiting On The Sidelines


Following a sharp rebound, Square Inc’s (NYSE: SQ) shares already reflect the company’s strong growth so far and the presence of significant market opportunity, while there exists execution risk to achieve elevated expectations, Keefe, Bruyette & Woods’ Steven Kwok said in a report. He initiated coverage of Square with a Market Perform rating and a price target of $13.

There were over 20 million businesses in the US that still did not accept card payments, analyst Kwok noted. He added that this represented a significant market opportunity for Square, which could drive future growth, along with the company’s plans to move upmarket and increase its exposure to international markets.

Expectations May Prove Too High

Square is expected to continue generating solid revenue growth and operating margin expansion. Kwok pointed out, however, that Square has been gaining market share mainly among micro merchants, a segment that was not the focus area of traditional merchant acquirers. As Square attempts to move upmarket and expand into international markets, the company would likely witness intensifying competition from existing and new players.

“Additionally, larger merchants typically require more specialized products and support, which could require higher levels of investment spend and elongate the timeline toward its long-term operating margin target,” the analyst wrote.

Rebound In Shares

Square’s shares have appreciated by 35 percent from their June lows. The company’s stock is currently trading “at about 27x our estimated 2018 enterprise value (EV) to EBITDA versus the peer average of 11x.”

Do you have ideas for articles/interviews you'd like to see more of on Benzinga? Please email with your best article ideas. One person will be randomly selected to win a $20 Amazon gift card!

Latest Ratings for SQ

Jan 2020UpgradesEqual-WeightOverweight
Jan 2020UpgradesNeutralBuy
Jan 2020DowngradesOutperformPeer Perform

View More Analyst Ratings for SQ
View the Latest Analyst Ratings

Posted-In: Bruyette & Woods Keefe Steven KwokAnalyst Color Initiation Analyst Ratings


Related Articles (SQ)

View Comments and Join the Discussion!

Latest Ratings

TCBIRBC CapitalMaintains59.0
ASMLRBC CapitalMaintains320.0
CLVSB of A SecuritiesMaintains10.0
FULCB of A SecuritiesMaintains22.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at