Square Inc. (NYSE:SQ) shares rose Friday after Needham analyst Mayank Tandon raised his price target on the stock to US$65 and Wedbush reiterated its Neutral rating due to the company's updated outlook.
The San Francisco mobile payment processor raised its revenue forecast for the second quarter and full year Thursday, based on its recently completed acquisition of Weebly, but lowered its full-year adjusted EPS forecast.
Square announced in April that it was buying website-builder Weebly for US$365mln to boost its online and e-commerce offerings for small and medium-sized businesses.
Wedbush approved of the firm’s monetization strategy but had concerns about rich valuation.
“While we continue to commend management’s monetization effort via building a unique eco-integration solutions platform tailored for merchants’ daily operations, we remain uncomfortable with the company’s valuation,” wrote Wedbush analyst Moshe Katri in a note to clients.
READ: Square takes over Weebly in a US$365mn deal
Square received a US$50 price target from Wedbush, but Needham assigned Square's stock a more generous US$65 price target.
According to a MarketWatch story, Tandon wrote that "higher estimates and increased confidence in the upside case" caused him to raise his price target.
"We see Square's continued success in penetrating the large TAM, moving up-market, cross-selling multiple products, and the inherent operating leverage in the model driving sustained upside results," wrote Tandon.
Square, run by Twitter Inc (NYSE:TWTR) co-founder Jack Dorsey, launched bitcoin trading in November for most users of its cash mobile payments app. According to Bloomberg, Square has surged “almost 50%, adding about $8bn in market value,” since the move.
READ: Square earnings and outlook disappoint as losses widen on high costs
Square ups second-quarter earnings
The payments company raised second-quarter revenue guidance in the range of US$744mln and US$764mln. Earlier this month, when it reported its first-quarter results, Square estimated 2Q revenues would fall between US$740 million and US$760 million. Adjusted earnings per share guidance remains the same, between US$0.09 and US$0.11 per share, below analyst estimates of US$0.12.
Square shares rose slightly to US$58.63 on Friday morning.