Square (SQ) is scheduled to report results of its first fiscal quarter after the market close on May 1, with a conference call scheduled for 5:00 pm EDT. What to watch for: 1. OUTLOOK: During the company’s last earnings call, Square said it sees first quarter adjusted earnings per share of 6c-8c, and adjusted revenue between $472M-$482M. The company also said it sees 2019 adjusted earnings per share of 74c-78c, and adjusted revenue between $2.22B-$2.25B. Additionally, Square noted in its letter to investors that, “Given the significant market opportunity ahead of us, we will continue to be purposeful as we reinvest in our business to drive long-term growth. Our guidance for the full year of 2019 reflects both investment and growing profitability. As a reminder, the first quarter is typically our slowest in terms of sequential revenue growth due to seasonality. Additionally, our operating expense base will increase in the first quarter as we invest in growth opportunities.” 2. GROWTH TO CONTINUE: On March 27, Macquarie analyst Gus Papageorgiou started coverage of Square with an Outperform rating and a price target of $94 as part of his broader research note on payment technology providers. The analyst cited the company’s ease of sign-ups along with its strong annual revenue growth of 52% in the past 3 years. Papageorgiou added that he expects growth to continue with more merchants adopting Square’s payments solution, boosting its overall payment volume while adding more services such as Capital, Instant Deposit, and Cash App. 3. SQUARE CARD: Earlier this month, KeyBanc analyst Josh Beck said he believes the Square Card for sellers has a “strong” product-market-fit due to the horizontal applicability of financial services and the unmet need among sellers, where about 40% do not have a business card. With a clear distribution path across the existing base via the highly engaged software dashboard and other channels, the analyst sees the card rapidly ramping to a $100M high-margin product. Beck reiterated an Overweight rating and $100 price target on Square’s shares. 4. SQUARE CASH APP DOWNLOADS ACCELERATING: Last month, Nomura Instinet analyst Dan Dolev told investors that his app tracker for the Cash App versus PayPal’s (PYPL) Venmo payments pointed to a “healthy pace” of downloads in February with 2.1M additional downloads, and year-over-year download growth accelerating for the second consecutive month to 37%. With 15M active users in December, the number of active Cash App users has more than doubled year-over-year, resulting in a slight improvement to the ratio of active versus total downloads, Dolev added. The analyst reiterated a Buy rating on Square’s shares, but lowered his price target on the stock to $105 from $110.
previous post