Square ( SQ ) is more likely to acquire software assets rather than be sold to credit card networks Visa ( V ) or Mastercard ( MA ), one analyst said in a note to clients Monday.
[ibd-display-video id=3016938 width=50 float=left autostart=true] Cowen's George Mihalos initiated coverage on the payment processor with a rating of "market perform" due to valuation. Mihalos also gives Square a price target of 36.
"We believe Square's growth prospects are reflected in the current stock price and advise investors to wait for a more attractive entry point," Mihalos said.
"(One) view discussed in media reports is that one of the networks might acquire Square. We view this as highly unlikely," said Mihalos. "The networks' main focus is converting cash to card - Visa and Mastercard win regardless of what entity issues the cards and who processes the payments."
Shares in Square rose a fraction to 38.30 on the stock market today . Square has shot up 180% in 2017, though it's retreated from an all-time high of 49 set on Nov. 24.
San Francisco-based Square makes credit card readers that plug into mobile phones and tablets. Square has expanded into providing financing and bank loans to small businesses.
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Square itself has made several smaller acquisitions, including Caviar in 2014, Killi Technology in 2015 and Main Line Delivery in 2016.
"On the software side, we believe it makes sense for Square to continue to move away from its horizontal strategy and move more toward vertical-specific software solutions (e-commerce, restaurants)," added the Cowen analyst.
Square Cash app users can now buy and sell Bitcoin, a cryptocurrency.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
