Market Overview

BTIG Downgrades Square To Sell: 'No Clear Path To Profitability In The Near Future'

BTIG Downgrades Square To Sell: 'No Clear Path To Profitability In The Near Future'
Related SQ
This Week In Cryptocurrency: Bitcoin Cash Soars, Square's Bitcoin Trading Revenue
80 Biggest Movers From Yesterday
Paychex: Debt-Free Dividend Growth But Not Yet A Buy (Seeking Alpha)

Square Inc (NYSE: SQ) stock is up an incredible 240 percent in 2017, but another analyst now says now is the time for traders to take their profits to the bank.

The Analyst

BTIG analyst Mark Palmer downgraded Square from Neutral to Sell and set a $30 price target for the stock.

The Thesis

Palmer said Square stock has come too far too fast and is due for a significant pullback. After assigning a 20 times multiple on BTIG’s fiscal 2020 earnings estimate, Palmer sees meaningful downside in Square’s share price.

“While we have been impressed by the growth that SQ has generated during the past few quarters in terms of both adjusted revenue and gross payment volume (GPV), we believe substantial growth is already baked into its share price and that it is difficult to justify its valuation at 28.1x FY20E adjusted EBITDA,” he wrote on Monday.

Palmer also said Square choosing to bring bitcoin trading capabilities to the Square Cash adds unnecessary risk for investors due to Bitcoin’s extreme volatility.

Palmer isn’t the first person to question Square’s valuation in recent weeks. Earlier this month, Strategic Wealth Partners CEO Mark Tepper said Square’s fundamental picture doesn’t support its extreme run.

“Square has a good track record of losing money, and there's just no clear path to profitability in the near future,” Tepper said on CNBC.

He said that unless investors see Square as the next Facebook, Inc. (NASDAQ: FB), they should expect a meaningful pullback ahead.

Price Action

Square opened Monday’s session down more than 6.5 percent and traded around $46.54 at time of publication.

Related Links:

Cash In On Square's Run, Analyst Says

Do You Use Square Cash? You Might Be Able To Buy And Sell Bitcoin

Image Credit: Mybloodtypeiscoffee (Own work) [CC BY 4.0], via Wikimedia Commons

Latest Ratings for SQ

Nov 2018BarclaysInitiates Coverage OnOverweight
Nov 2018Wells FargoMaintainsMarket PerformMarket Perform
Nov 2018SusquehannaDowngradesPositiveNeutral

View More Analyst Ratings for SQ
View the Latest Analyst Ratings

Posted-In: btig Mark Palmer Mark TepperAnalyst Color Downgrades Price Target Top Stories Analyst Ratings Best of Benzinga


Related Articles (FB + SQ)

View Comments and Join the Discussion!

Latest Ratings

CPAImperial CapitalDowngrades68.0
PRMWImperial CapitalInitiates Coverage On18.0
TGTKeyBancInitiates Coverage On110.0
QCOMMorgan StanleyUpgrades0.0
View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
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
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

Analyst Remains Buyer Of Ulta Beauty As Q3 Earnings Release Nears

Roark Reportedly Raises Bid For Buffalo Wild Wings, Stephens Says A Deal Is 'Likely'