Square lower after Cowen downgrades on over 200% rally - InvestingChannel

Square lower after Cowen downgrades on over 200% rally

Square (SQ) is trading lower after Cowen downgraded the shares to Market Perform from Outperform despite increasing its price target to $119 from $79. The stock in premarket trading is down 1% to $131.85. The greater than 200% rally in shares since mid-March has “more than priced in all the good news” from the Cash App business and does not discount enough the “multi-year recovery” the Seller business will need, analyst George Mihalos told investors in a research note. The analyst says a “generous sum-of-the-parts analysis” yields the $119 price target. Unlike digitally native financial technology companies like PayPal (PYPL) that are clear intermediate and long-term beneficiaries of COVID-19, the situation is “more mixed” for Square, contends the analyst. The company’s Cash App customer acquisition and monetization are benefiting from the pandemic but its Seller business will likely require a multi-year recovery given “outsized” exposure to small- to mid-sized businesses, contends Mihalos. As such, the analyst see more compelling opportunities in other payments names, like PayPal.