Analysts at Mizuho Securities believe Square Inc. (NYSE: SQ) is grossly undervalued. Several bank analysts raised SQ’s target price to $ 380 on Monday. SQ’s share had a price of $ 256.59 at the Feb. 23 auction.
Stocks of Square Inc. (NYSE: SQ) are 17.90% above their year-to-date (YTD) average and moved -4.29% or -$11.49 lower in the last trading session. But its trailing 12-month performance remains almost 219.90% higher. The stock has gained 33.88% over the trailing 3-month period. Based on the shorter duration, its weekly performance is down -7.04%. SQ Stock has gained 15.12% over the month.
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Mizuho Securities reports that Square will generate $30 billion and $6 billion annually in revenue from its Cash App and Seller GP by 2031, respectively. As a result, they raised the target price by $600 but noted that their scenario is rather conservative.
In the beginning, Square provided cashless payment solutions for foodservice establishments and retail outlets. Nonetheless, the Cash App, a peer-to-peer payment app, has been an even more serious driver for the company in recent years. Cash App is a popular option for making payments between individuals.
Mizuho predicts that Cash App could achieve a three-year CAGR of about 200 %. Moreover, analysts think Square is far from reaching its full potential, pointing to areas like cryptocurrencies and stock trading as areas that could provide a stronger growth driving force for the company.
Small and medium-sized sellers would greatly benefit from a payment app targeting them. With Square’s solutions, customers’ businesses can quickly transition to the rapidly expanding digital payments market that’s been particularly in demand during the coronavirus epidemic. Digital payments will continue to grow in the world, increasing the demand for Square solutions.