Evercore ISI Upgrades Square On Cash App Prospects

Square Inc SQ Is poised to benefit from the potential for Cash App to sustain “extraordinary growth” through rapid innovation and expansion of its total addressable market, according to Evercore ISI.

The Square Analyst: Rayna Kumar upgraded Square's stock rating from In Line to Outperform, while raising the price target from $161 to $300.

The Square Thesis: The company’s Cash App business is likely to generated adjusted revenue growth at a compounded annual rate of 36% for the next three years and significantly beat the current consensus estimates through 2022, Kumar said.

“Over time, Cash App could become a one stop, disruptive, digital payments bank. With P2P, digital wallet, debit card, stock trading, and Bitcoin purchasing capabilities already in place, and, with its banking license, consumer and SMB lending potential, we believe Cash App’s network will continue to grow aggressively with expanded paths to monetization over time,” the analyst wrote in a note.

Driven by Cash App, Square could “grow total adjusted EBITDA by 53% annually, on average, over the next three years,” he added.

SQ Price Action: Shares of Square were trading up 2.8% to $207.86 at the time of publication Thursday.