Square Inc. Chief Executive Jack Dorsey will have more time to focus on the payments company now that he is stepping down from the CEO position at Twitter Inc. and that has one analyst feeling better about Square's stock.
Jason Kupferberg, a Bank of America analyst, upgraded Square's stock SQ to neutral from underperform Tuesday, saying that Dorsey is now all in on Square, which made Kupferberg incrementally encouraged about the company's prospects. He boosted his price objective to $221 from $210, while Square shares fell 2.1% in Tuesday s session to $208.50.
See more: Twitter CEO Jack Dorsey to step down and be replaced by CTO Parag Agrawal Kupferberg, as Square executives and investors will focus more on the company's planned acquisition of Afterpay Ltd. in the first half of the new year. Square is looking to boost its seller and consumer-facing Cash App businesses with a new all-stock deal for Afterpay, which could boost its pay-now pay-later game. The deal would give Square the ability to compete with Affirm Holdings Inc. AFRM, and deepen its rivalry with PayPal Holdings Inc. PYPL, which also offers BNPL capabilities. Square shareholders have already approved the deal, and Afterpay shareholders are likely to approve it in early December. Kupferberg would then expect Square to be able to discuss more specifics around Afterpay revenue synergies. He will be watching for any mid-quarter updates on the seller and Cash App businesses when Square presents at a Credit Suisse conference on December 1. Kupferberg has boosted his rating, three analysts tracked by FactSet rate Square s stock the equivalent of sell, while 11 rate it a hold and 25 rate it a buy. Kupferberg still has some concerns, and isn't ready to turn fully bullish on the payments stock. He wrote that Square has not yet reinstated top-line guidance and that we don't want to get more positive on the stock until there is better visibility on the near-term and medium-term trajectory of Cash App gross profits. We also recognize that growth stocks such as Square could be under pressure if Treasury yields start to climb again. Opinion: Jack Dorsey didn't change the trajectory of Twitter. Square shares have fallen 18.3% over the past month, as the S&P 500 SPX has lost 0.3%.