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Payments processor and digital cash register maker Square ( SQ ) is set to release its first earnings report since its November IPO after the close Wednesday, with analysts keen to see results from its Square Capital and Square Cash operations. The fourth-quarter report could be better than expected, RBC Capital Markets analyst Daniel Perlin said in a research note Monday. Analysts polled by Thomson Reuters expect Q4 revenue to clock a 37% year-on-year gain to $343 million, with a per-share loss minus items of 13 cents, compared with an 11-cent loss a year earlier. Square produces a line of digital cash registers and credit card readers targeting smaller businesses. It also processes the payments on these devices. Square has branched out to marketing and financial services — such as payroll — and offers short-term cash advances based on the transaction data it collects. RBC’s Perlin expects a 14% sequential increase in software and data revenue, driven by Square Capital, the company’s financial services business. “Arguably one of the more important drivers to total revenue growth, Square Capital will be a key focal point on the earnings call, as management has devoted considerable resources to the growth of this business,” Perlin wrote. Perlin expects a lofty 140% increase in hardware sales, saying demand for the company’s credit card chip readers has been strong. Square also has a peer-to-peer payments app called Square Cash that competes with payments giant PayPal ( PYPL ) and its P2P app, Venmo. Both are said to be popular with millennials, the coveted young-adult demographic. Perlin has a price target of 15 on Square stock, which was down 2% in morning trading in the stock market today , near 12. Square priced its IPO at 9, peaking its first day on the market, at 14.78. Shares touched a two-month high of 12.65 last week. The company has a weak IBD Composite Rating of 46, where 99 is the highest. Scalper1 News
Scalper1 News