Square stock is a 'must own' given long growth runway, says Jefferies

Jefferies analyst Trevor Williams assumed coverage of Square Inc. shares $(SQ)$ Thursday, assigning the stock a buy rating and $300 price target.

Under a previous Jefferies analyst's coverage, Square had a hold rating and $265 target. Williams sees a long growth runway for Square with opportunities to win market share in its seller business and drive synergies once it completes its planned acquisition of buy-now pay-later operator Afterpay Ltd. He called the stock a "must own" and deemed Square's Cash App the leader in the "crowded" world of neobanks.

"As the pace of disruption within payments and broader FinTech ecosystem accelerates, we believe companies with track records of product development and innovation...offer the best protection against eventual obsolescence, and are most likely to outperform long-term," Williams wrote.

Still, he sees some risks for the company, including that consensus expectations for the third quarter might be too optimistic.

Shares of Square are up 2.9% in premarket trading Thursday. They've slipped 2.3% over the past three months as the S&P 500 has increased 0.1%.