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Square (SQ): One Analyst Finally Got off the Fence — but for What?

July 8, 2020

Will anything stand in the way of Square’s (SQ) ascent? The fintech disruptor has been on a turbocharged run up recently (up by 150% over the past 3 months) and despite the lofty valuation, the surge hasn’t encountered any significant pullbacks yet.

The latest rally was partially fueled by a slew of price target and rating upgrades from Street analysts. Among those backing the Square story was Rosenblatt analyst Kenneth Hill. Hill initially intended to downgrade Square’s rating, believing the extended share gains didn’t correlate with the company’s earnings. However, a deeper inspection resulted in a turnaround and Hill’s glowing review – in particular of Square’s Cash App – helped push shares to a new all-time high in Tuesday’s session.

But the reaction to the upgrade took Hill by surprise. Among the retorts were questions regarding its timing, especially considering Square’s outsized recent gains.

Offering an explanation, Hill said, “We still see a tremendous amount of room to run over the coming years and felt the upgrade was the best way to capture that sentiment. Others agreed with the call but are looking for a pullback in the market to knock down shares before getting engaged (providing some downside protection, in our view).”

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