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Investing.com – Square (NYSE:SQ) surged on Tuesday as Wall Street turned more positive on the company on expectations that small businesses on the company’s platform are set for big fiscal injection as Congress readies a $2 trillion stimulus package that could include financial loans to businesses.
Nomura lifted its rating on Square to neutral from reduce, sending its shares up 22%.
“While it’s too early to ascertain the failure rate of Sqaure’s large SME customer base, we no longer believe a reduce rating is appropriate given the 46% decline in shares from their February highs,” Nomura said in a note to clients.
The bank also expressed optimism in the payment company’s ability to cut costs and preserve capital at a time when many are concerned the shutting of the U.S. economy due to the Covid-19 pandemic will hurt activity and cash flows.
“While Square did not provide specifics on positive operating leverage, it does have numerous levers to dial back on opex,” Nomura said.
