Benzinga | Nov 30, 2021 04:55PM EST

BofA Upgrades Square After Selloff

Square Inc's (NYSE:SQ) share are trading around 25% below August highs and are down around 15% since the company reported earnings on Nov. 4.

The stock now adequately prices in potential deceleration in Cash App gross profit growth, according to BofA Securities.

The Square Analyst: Jason Kupferberg upgraded Square from Underperform to Neutral while raising the price target from $210 to $221.

The Square Thesis: Investor focus could soon turn to the Afterpay acquisition, which is expected to close in the first half of the first quarter of 2022, Kupferberg said in the upgrade note.

"We continue to believe in the strategic rationale for acquiring Afterpay, which should fit neatly into SQ's Seller and Cash App ecosystems," the analyst wrote.

"That said, we remain more bullish on the Cash App synergies than in Seller, where Afterpay's Buy Now, Pay Later service may have somewhat limited applicability, and we are not convinced that Afterpay's larger merchants will switch their POS to SQ," he added.

SQ Price Action: Shares of Square were down 1.96% at $208.62 midday Tuesday.