4 Takeaways On Square From Nomura

Square, Inc. SQ reported third-quarter earnings Nov. 7 that beat estimates for both sales and earnings. The company raised its fourth-quarter guidance and conducted investor relations meetings in New York City.

The Analyst

Nomura analyst Dan Dolev maintained a Buy rating on Square and lowered the price target from $125 to $107. 

The Thesis 

Dolev named four takeaways from Nomura's recent meetings with Square. (See the analyst's track record here.)

They are: 

• The surprising success of the Cash App. This contributed directly to Square's increased revenue guidance over 2017, Dolev said. 
• Square's long-term expectations for the Cash App. The application is destined to cater to the underbanked, the analyst said. 
• “Management’s holistic view of the Caviar food ordering platform.” Earlier this year, Square launched a new restaurant point-of-sale system integrated with Caviar, the delivery service the company acquired in 2014.
• “Success with large customers helping sustain the three-to-four-quarter payback period, and nurturing a balanced approach to investments.”

Nomura lowered its 2019 earnings guidance from $508 million to $464 million.

Competition

Square competes with big payments players like PayPal Holdings, Inc. PYPL’s Venmo and Zelle, and several fintech startups entered the space, including companies like Stripe, Dwolla, Slim Pay, Cheddar Up and WePay.

Price Action

Square shares have fallen roughly 17 percent in the last month and declined 10 percent Monday. This stock movement comes amid the early departure of CFO Sarah Friar as well as the sell-off in several tech stocks of late.

The stock was down 1.64 percent at $61.96 at the time of publication Tuesday afternoon. 

Related Links:

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Photo courtesy of Square.