Shares of Square Inc. SQ gained more than 4.5% in early morning trading Wednesday after a recent survey found widespread satisfaction among the payment company's merchants and highlighted new bitcoin-related opportunities that could be on the horizon.
Square merchants polled by analysts at Instinet reported broad satisfaction for Square's services, with 38% of users rating the company as excellent and 58% saying it was at least good. Instinet also suggested that Square may have only just scratched the surface in terms of potential revenue opportunities.
"Like Amazon.com Inc. its early days, we believe that little of Square's future revenue streams are currently visible," said the firm's Dan Dolev.
One of these potential revenue streams could open through wider adoption of bitcoin-related services, the analyst suggested. Instinet's poll found that 60% of merchants would be willing to accept the cryptocurrency, a response that Dolev said was "surprising, especially amid Bitcoin's elevated volatility."
Dolev has a buy rating for Square and a $64 price target for its stock-the highest forecast among research firms that cover the company, according to FactSet.
Still, analyst sentiment regarding Square's near-term performance has been mixed. Within the past 60 days, we have seen five positive revisions to the company's full-year earnings estimates, which is outpaced by the eight negative revisions that have come in that timeframe. The Zacks Consensus Estimate for Square's full-year EPS has remained flat within this window.
This mixed earnings estimate revision activity has kept the popular stock at a Zacks Rank #3 (Hold).
Nevertheless, analysts appear to be in agreement that the next few years will mark a period of massive growth for the young payments company. Current projections are calling for earnings growth of roughly 60% in both the current and next fiscal year, while total revenues are expected to improve by about 30% in both of those periods.
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