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Square Silences Critics; BTIG Still Buying The Stock

Square Silences Critics; BTIG Still Buying The Stock - Square NYSE:SQ

Square Inc SQ has silenced critics with its robust 2Q16 results, where the adjusted EBITDA handily beat the estimate and the consensus.

BTIG’s Mark Palmer reiterated a Buy rating on the company, with a price target of $12.

Critics Answered

“With investor doubts about Square Inc.’s ability to drive profitable growth throughout its franchise still lingering, and qualms about whether Square Capital would be able to attract investors to fuel its growth persisting, the company today after the market close posted a 2Q16 report that provided an emphatic answer to such questions,” Palmer mentioned.

Related Link: Square "Made Up" For Last Quarter; Morgan Stanley Raises Price Target To $11

2Q Beat

The company reported its 2Q16 adjusted EBITDA at $13 million, meaningfully ahead of the consensus and the estimates, with Square achieving a significant milestone in profitability on an adjusted EBITDA basis ahead of the schedule laid out by management.

The outperformance also included a 42 percent increase in total payment value to $12.5 billion, while expense growth was slightly slower than anticipated.

Square Capital

Square Capital, which had witnesses a slowdown in sequential loan growth in 1Q, reported a 23 percent sequential increase in loan originations for 2Q, to $189 million, while announcing the addition of five more investors to fund future growth.

Guidance Raised

The company raised its adjusted EBITDA guidance for FY16 from $8–$14 million to $18–$24 million. Square also increased its FY16 net revenue guidance from $615–$635 million to $655–$670 million.

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Aug 2016BTIG ResearchMaintainsBuy
Aug 2016Morgan StanleyMaintainsEqual-weight
Aug 2016BarclaysMaintainsOverweight

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