Bank Analysts Clash on Square Price Targets After Q4 Results

At least two major banks walked away from Square’s Q4 earnings report with diverging viewpoints on which direction the payments company’s share price, which was at about $256 at the time of the company’s earnings release Tuesday afternoon, will head next, according to investor notes viewed by CoinDesk.

Analysts at Royal Bank of Canada (RBC) gave 19% upside for SQ and upgraded its price target to $305 from $257, predicting the company would “outperform” (roughly equivalent to buy). But their peers at Goldman Sachs, which rates SQ a “neutral,” took the opposite perspective, notching a 4% downside that would put SQ at $246 this time next year.

(Goldman’s rating actually was a slight upgrade from a Feb. 23 “first-take” investor note that targeted SQ at $216.)

RBC noted “management’s commitment to bitcoin as the currency of the internet” and was bullish on Square’s capitalization of a “multi ecosystem opportunity.” It estimated a 69% jump in 2021 bitcoin revenue that would generate Square $7.75 billion. Goldman was largely mum on the bitcoin upside, downgrading bitcoin revenue estimates for 2021 to $7.23 billion from $7.43 billion.

Even so “the margins on bitcoin revenues has continued to expand,” Goldman’s analysts wrote.

Square’s Cash App generated $4.57 billion in bitcoin revenue in FY2020, contributing $97 million to gross profit.

Analysts with Royal Bank of Canada and Goldman Sachs gave divergent estimates for the bitcoin-friendly payments firm.

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