News of Square's (SQ -5.40%) deepened investment into payroll with a mobile app for the service helped the stock surge yesterday. But another catalyst for the financial-technology company's stock was likely a massive price-target increase from Nomura Instinet analyst Dan Dolev. 

Dolev thinks Square stock can hit $125 in just 12 months. His revised 12-month price target is 45% higher than his previous target, and about 31% higher than where the stock was trading (about $95) as of 9:47 a.m. EDT on Wednesday.

Here's why Dolev is so bullish on Square:

An employee and customer interact with the two displays included with Square Register

Square Register in action. Image source: Square.

Success with larger sellers is a key catalyst

There are several themes behind Dolev's optimistic view for Square stock. But he believes the company's ability to attract large sellers is fundamental to the fintech stock's growth story.

"The most important thing to understand about Square is that their success with the larger seller is what has been the turning point for gross payment volume growth," Dolev said in an interview with Bloomberg, as he explained his bullishness on the stock. To underscore his point, Dolev noted the company's rapid growth in sellers with more than $125,000 in annualized gross payment volume (GPV).

For the first time, half of Square's quarterly GPV was from sellers with over $125,000 in GPV in the second quarter. In the year-ago quarter, these larger sellers accounted for a lesser 46% of total GPV. Growth from sellers with $125,000 or more in GPV is astounding, with GPV from this group rising 42% year over year in Q2.

It's also worth noting that two of Square's newest products -- Square Register and Square for Restaurants -- look poised to strengthen the company's ability to attract larger sellers. For instance, the average GPV for Square for Restaurants customers is over $650,000. Meanwhile, the average GPV for Square Register users is $300,000. 

A cohesive ecosystem

Another key reason for Dolev's big price target for Square is how the company's rapid pace of innovation and product launches are building an increasingly robust ecosystem of financial services for businesses and consumers.

Dolev told Bloomberg: "They are going at it from multiple directions. They are the only payments company that has a fully cohesive ecosystem. It's a very much Apple-like ecosystem."

Highlighting the company's ability to build out its ecosystem, Square has launched numerous successful products in recent years that are contributing meaningfully to top-line growth. Major successes since 2014 include Square Capital (a business financing arm), a payroll service, Virtual Terminal (a tool enabling sellers to accept online payments), Register (a high-end point-of-sale device), Square for Restaurants (a cohesive software platform for restaurants), and more.