At least two major banks walked away from Square's Q4 earnings report with diverging viewpoints on which direction the payments company's share price, which was at about $256 at the time of the company's earnings release Tuesday afternoon, will head next, according to investor notes viewed by CoinDesk.
Analysts at Royal Bank of Canada (RBC) gave 19% upside for SQ and upgraded its price target to $305 from $257, predicting the company would "outperform" (roughly equivalent to buy). But their peers at Goldman Sachs, which rates SQ a "neutral," took the opposite perspective, notching a 4% downside that would put SQ at $246 this time next year.
(Goldman's rating actually was a slight upgrade from a Feb. 23 "first-take" investor note that targeted SQ at $216.)
RBC noted "management’s commitment to bitcoin as the currency of the internet" and was bullish on Square's capitalization of a "multi ecosystem opportunity." It estimated a 69% jump in 2021 bitcoin revenue that would generate Square $7.75 billion. Goldman was largely mum on the bitcoin upside, downgrading bitcoin revenue estimates for 2021 to $7.23 billion from $7.43 billion.
Even so "the margins on bitcoin revenues has continued to expand," Goldman's analysts wrote.
Square's Cash App generated $4.57 billion in bitcoin revenue in FY2020, contributing $97 million to gross profit.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is an award-winning media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. In November 2023, CoinDesk was acquired by Bullish group, owner of Bullish, a regulated, institutional digital assets exchange. Bullish group is majority owned by Block.one; both groups have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary, and an editorial committee, chaired by a former editor-in-chief of The Wall Street Journal, is being formed to support journalistic integrity.