How Wall Street Rates Square after CFO Departure



Wall Street ratings on Square

The stock of Square (SQ), a mobile payments company, has plunged ~20% in the past two days, as discussed in the previous article, due to the announcement of the departure of its CFO, Sarah Friar. The stock has declined ~30.2% since the beginning of October.

Out of the 36 analysts covering Square, 17 analysts have rated the stock a “buy,” while 17 analysts rated the stock a “hold.” Two of the analysts have given the stock a “sell” rating, which signals that the majority of analysts are positive on the stock despite the CFO’s resignation. The stock could be a good buy at this point, as it has been oversold recently and the company has strong revenue potential. Analysts have set a target price of $82.24 for the stock and a median consensus estimate of $86.00. Square is now trading at a 19.7% discount to its consensus median target estimate.

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Analysts’ rating on Square

According to some analysts, Friar’s exit will reportedly pull down the stock in the near term, as investors might remain cautious over the company’s business operations in the absence of a leader like Friar. The exit of Friar is also expected to put pressure on Square’s CEO Jack Dorsey, who is also the co-founder and CEO of Twitter (TWTR). BTIG analyst Mark Palmer has, therefore, reiterated his “sell” rating on Square with a price target of $30. Mizuho’s analyst Thomas McCrohan kept its “buy” rating but slashed its price target to $90 from $95 given the uncertainty about Square’s business operations.

Research firm Guggenheim also foresees the CFO’s departure as a near-term negative and remains cautious about the company’s growth prospects in the months ahead. However, the firm seems to be positive on the stock as Square will likely report solid third-quarter results on November 7. Guggenheim has therefore maintained its “buy” rating and $100 price target.

Analyst James Friedman of Susquehanna is confident, as the former CFO of Goldman Sachs (GS) is looking for a new CFO for the company, and will attempt to get an equally efficient and experienced executive to run the payments company. Susquehanna has reiterated its positive rating and $77 price target, while Citi reaffirmed its neutral rating and $67 price target.


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