Square Stock Surges Following Analyst Upgrade

Analyst shifts from bearish to neutral on Square's outlook

Shares of Square, Inc. (SQ) surged by 6% during Tuesday's trading session after Raymond James upgraded the stock to Market Perform. Analyst John Davis noted that the previously bearish short thesis has largely played out, resulting in a more balanced risk-to-reward profile for investors. He also emphasized that Square's business-to-business seller card is gaining momentum, potentially becoming a significant driver of future growth.

This upgrade follows Argus's recent initiation of coverage on Square with a Buy rating and a price target of $94 per share. Argus highlighted Square's technological advancements, robust brand presence, and expanding merchant adoption. Analyst Stephen Biggar projects an impressive 56% average annual earnings growth over the next two years, supporting his valuation multiple of 82 times FY 2020 earnings. Multiple other analysts share a similarly optimistic view on the stock.

In its latest quarterly report, Square exceeded expectations with its second-quarter financial results; however, the guidance for the upcoming quarter did not fully satisfy market expectations. Management remains confident that the Cash App will continue to fuel growth, with transaction volume increasing nearly 2.5 times year-over-year, driven by enhanced network effects, wider reach, and improved user engagement.

From a technical perspective, Square's stock recently broke above a key trendline resistance, revisiting its previous highs from March. The Relative Strength Index (RSI) approached overbought territory with a reading of 69.55, while the Moving Average Convergence Divergence (MACD) maintained its bullish momentum. These signals indicate potential short-term consolidation before the stock continues its upward trajectory in the intermediate term.

Investors should monitor potential consolidation between the trendline support at $74.00 and resistance near $82.00 in upcoming sessions. A breakdown below trendline support could prompt a decline toward the 200-day moving average at $71.81 or the 50-day moving average at $68.85. Conversely, a breakout above resistance may pave the way for a rally toward all-time highs close to the $100 mark.

The author holds no direct positions in the stocks mentioned, aside from passive index fund holdings.

Explore useful articles in Company News as of 14-07-2019. The article titled " Square Stock Surges Following Analyst Upgrade " offers in-depth analysis and practical advice in the Company News field. Each article is carefully crafted by experts to provide maximum value to readers.

The " Square Stock Surges Following Analyst Upgrade " article expands your knowledge in Company News, keeps you informed about the latest developments, and helps you make well-informed decisions. Each article is based on unique content, ensuring originality and quality.