Square, Inc. (SQ) is still sliding in premarket trading Thursday amid the departure of CFO Sara Friar, but analysts are not pulling back from their bullishness on the stock.
Shares of the San Francisco-based merchant company are falling some 10% premarket, marking the second straight day of double-digit declines for Twitter, Inc. (TWTR) CEO Jack Dorsey's mobile payment platform. The stock has swiftly lost steam this month, falling from over $100 per share on Oct. 1 to around $70 early Thursday morning.
Really proud of @thefriley for taking the big step to fulfill her lifelong ambition to be a CEO. Thank you Sarah. We love you and I'm going to miss building Square with you, but I'm so happy for you. ❤️❤️❤️— jack (@jack) October 10, 2018
Still, analysts are seeing an opportunity to pick up shares of the company at a discount given its more than 100% rise this year.
"We believe investors should take advantage of the recent weakness in SQ stock and raise our target price to $94," Credit Suisse analyst Paul Condra said. "We remain bullish on SQ and note several initiatives launched since second quarter results as well as core business strength give us continued confidence in the story."
He retained his "outperform" rating for the stock.
To be sure, Friar's departure is clearly adding to pain for investors in the near term as they lament the loss of the former Goldman Sachs (GS) Managing Director and Salesforce.com, Inc. (CRM) SVP of Finance as she moves to become CEO of new social network Nextdoor.
"Sarah is one of the most highly regarded executives in Silicon Valley with an exceptionally rare mix of proven business skills, and authentic heart and soul," Nextdoor co-founder and CEO Nirav Tolia said in a statement. "From the very beginning of our CEO search, she has been the top choice, and the board of directors and I feel exceptionally fortunate and excited for her to lead Nextdoor moving forward."
The respect from Silicon Valley is working in a reciprocal fashion for Square, which is losing the financial guidance of an executive that led the company through its IPO in 2015 and to its aforementioned heights.
But with the catalysts that remain, analysts are still confident in the long-term story if the short-term squeeze can be endured. In fact, all three analysts publishing research on the news have issued "buy" ratings given the weakness in the shares, according to FactSet.
"While many questions have yet to be answered around installment pay it nevertheless underscores SQ's continued expansion as an e-finance as well as an e-commerce platform," Condra noted.
In a blue sky scenario, he sees the stock going as high as $127 per share, a nearly 100% return on a stock that has already risen over 100% so far in 2018.