Square Stock Could Increase 25% As Cash App Is ‘Must-Have’ Fintech Innovator Developer, Jefferies Says

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Square’s Cash app.
  • Square stock could climb 25% from current levels at $ 300, Jefferies said in a note Thursday.
  • The payments technology company has been upgraded to a buy rating and its price target has increased from $ 265.
  • Jefferies sees its Cash App product as a key part of Square’s position as a fintech disruptor.
  • See more stories on the Insider business page.

Square stock has the potential to rise 25% from current prices, Jefferies said in a note on Thursday as he upgraded the payment company and touted its Cash app.

“In a context of [accelerating] disrupting payments and the wider FinTech ecosystem, we believe SQ is a long-term staple as a proven innovator, ”wrote Jefferies analyst Trevor Williams as he assumed coverage of Square by upping his rating to buy suspension.

The price target has also been raised from $ 265 to $ 300. The new target would be a 25% increase from Wednesday’s closing price of $ 239.12. Square stock gained 3.5% on Thursday, and so far this year it is up nearly 10%.

Jefferies said the Cash app is the leader among consumer digital wallets and so-called neobanks. The mobile application is used for money transfers and direct deposits as well as for the purchase of stocks and bitcoins. Williams predicts it will drive two-thirds of this year’s gross profit growth to 2025.

“Despite an increasingly crowded landscape, we believe Cash App’s large and highly engaged user base, pace of innovation, efficient customer acquisition and compelling cohort economy position Cash App as a long term winner, ”he said.

Cash App, which runs the much-publicized “Cash App Friday” marketing campaign on Twitter, could reach 85 million monthly active users by fiscal 2025, up from 40 million currently. Square co-founder and CEO Jack Dorsey is also the co-founder and CEO of Twitter.

Meanwhile, Square is working on finalizing its $ 29 billion share purchase plan of Afterpay, a buy-now and pay-after service.

In addition to the Cash App, it appears to be one of Square’s other pillars of financial growth, Jefferies said. “We believe the combination will be very accretive for gross profit and, therefore, view the stock as attractively valued relative to our expectations for the pro forma growth profile.”

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