Square's New Bull Says Sell-Off and Growth Make Now Time to Buy

(Bloomberg) -- Square Inc.’s sell-off following news that Chief Financial Officer Sarah Friar will depart the company later this year makes now the time to buy into the stock, Canaccord said.

Analyst Michael Graham upgraded the stock to a buy from hold on Friday, calling it a“truly disruptive and well-run company” that’s on solid footing with growth opportunities in its U.S. and international payments businesses. Square’s seller data could also become a base to develop a wide range of products, including beyond its current finance-specific offerings, Graham said in a note to clients.

The stock gained 7.2 percent in pre-market trading, retracing some of its 27 percent slide this week between Friar’s exit and a widespread slump in global markets.

“The fact that she is leaving to take a CEO role at a promising company leaves us comfortable that she is moving toward an opportunity and not away from a risk,” wrote Graham, who had rated the stock as a hold since initiating coverage two years ago. “That said, it will be important for Square to swiftly find a replacement with the experience to help the company scale from here.”

Nomura Instinet analyst Dan Dolev also defended the stock, saying Friar’s “departure is unlikely to disrupt the innovation engine behind Square” amid the company’s “ever strengthening fundamentals.” Dolev also recommends buying shares and holds the highest price target on Wall Street at $125.

The stock has buy ratings from 17 analysts, while 18 say hold and two recommend selling, according to data compiled by Bloomberg. Their average price target of $83 implies about a 20 percent return from Thursday’s closing price.

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