Shares of Square (SQ 3.97%) popped 4.6% in noonday trading Wednesday. French investment bank Oddo BHF initiated coverage of Square this morning, TheFly.com reports, and Barclays (NYSE: BCS) just raised its price target on the point-of-sale credit card processor to $330.
There's not much detail on why Oddo initiated coverage of Square today, and in any case, the analyst there only gave the stock a neutral rating, so it may not be overly optimistic.
In today's ratings tweak, Barclays argues that Square has been investing significantly in its international operations, is hiring briskly abroad, and is now "finally positioned correctly" to grow in global markets. This implies that there's now meaningful upside for Square to outperform analyst expectations internationally, Barclays says, giving rise to the possibility of an earnings beat when Square reports its first-quarter 2021 results, probably in May.
Analysts were already feeling pretty optimistic about those first-quarter results, forecasting a turn to profitability and $0.16 per share in pro forma earnings -- and 138% revenue growth to $3.3 billion. So how much might international growth move those numbers?
According to S&P Global Market Intelligence, Square currently gets only about 3.3% of its total revenue from outside the U.S. On the one hand, this means that even a doubling of international revenue would still leave this segment very small relative to U.S. sales, at least initially. On the other hand, it means that there's quite a lot of room to grow internationally. Barclays (and Oddo, too) are probably right to be optimistic.