The stock has 17% potential upside from KBW analyst Steven Kwok’s $250 price target, he said in a commentary.
“While we might not be catching the bottom of the growth to value trade, ... Square is a long-term winner within the underserved market,” Kwok said.
He pointed to the San Francisco company's “two large and successful ecosystems (Seller and Cash App) along within incremental investments/initiatives such as Tidal, Credit Karma Tax division, and Square Financial Services that can help increase engagement and drive incremental growth.”
Square stock recently traded at $230.70, up 8.4%. It has gained 37% over the past six months as e-commerce exploded during the COVID pandemic.
Also this month, Square said it agreed to pay $297 million for a majority stake in the music-streaming platform Tidal. Hip-hop legend Shawn "Jay-Z " Carter is expected to join the financial-services company's board once the deal closes.
The transaction is expected to close in the second quarter. Square does not expect Tidal’s financial results to materially affect its consolidated revenue or gross profit in 2021.
Tidal will operate independently within Square, the company said, alongside Seller and Cash App.
Last month, Oppenheimer raised its price target for Square by a third, to $280 from $210, and affirmed an outperform rating on the stock.