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Why Square Stock Rose Today

By Joe Tenebruso - Updated Jun 22, 2020 at 6:45PM

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Analysts are becoming more bullish on the fintech company's growth prospects.

What happened

Shares of Square (SQ -2.54%) climbed more than 6% on Monday, following the release of a bullish analyst note from investment bank Barclays. 

So what

Barclays analyst Ramsey El-Assal reiterated his "overweight" rating on Square's stock and boosted his target price from $90 to $115. 

El-Assal believes that Square's merchants will be able to bounce back from the coronavirus pandemic better than many investors currently expect. He also predicts that strong demand for Square's Paycheck Protection Program loans will help to offset declines in its Square Capital lending business during the COVID-19 crisis. 

A sculpture of a bull.

Barclays is bullish on Square's stock. Image source: Getty Images.

Moreover, El-Assal says solid growth in Cash App users and Square's recent acquisition of Spanish peer-to-peer payments start-up Verse could be "underappreciated drivers" for its stock. 

Now what 

With thousands of small businesses forced to close because of the pandemic and corresponding social-distancing measures, investors feared that many Square merchants would not survive. However, if these concerns prove overblown -- and Square's merchants are able to weather not only the closure of their stores but also the current coronavirus-related economic downturn and shifting consumer spending habits -- then investors might also be underestimating Square's near- and long-term growth prospects. And if that's true, then Square's stock likely has more upside ahead.

Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Square and recommends the following options: short September 2020 $70 puts on Square. The Motley Fool has a disclosure policy.

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