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Why Did Square (SQ) Stock Pop Today?

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Shares of Square (SQ - Free Report) popped more than 3.4% in early morning trading Thursday after analysts from Credit Suisse upgraded the stock, citing the growing number of applications for its production offerings for merchants.

Credit Suisse raised its rating for Square to outperform from neutral. The firm also raised its price target for the stock to $81 from $44, which represents a 19% premium to Wednesday’s close.

“SQ’s evolution from a payment company to a differentiated consumer and merchant services platform increases our conviction that the company can extend its business well beyond micro-merchants to include SMB and middle-market companies,” wrote analyst Paul Condra in a note to clients Thursday.

Condra noted that Square’s growing product ecosystem is helping the company attract larger merchants, widening its payment opportunity while adding new subscription and service revenue outlets.

The analyst also mentioned that Square has added point-of-sale software for restaurants, new hardware, customer relationship management tools, and more to its product suite—all in addition to its traditional payments solution.

Credit Suisse estimates Square has only captured 3% to 4% of the $2 trillion in payment volume generated by small- to medium-sized businesses around the world, so there is plenty of room for growth. The firm is also bullish on Square’s opportunity in the cryptocurrency market.

“We view the core payment opportunity as very large,” Condra said. “We believe crypto currencies are not going away and expect that over time they are likely to find more applicable use cases. While this is a small opportunity currently, we view SQ as among a handful of companies - and the only public one - at the forefront of shaping the evolution of this industry.”

Squares shares had already added about 97% this year heading into today.

Want more market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!

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