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Square Upgraded After Earnings, Signs Bode Well For Growth

Square Inc.'s latest earnings announcement appeared to be met with enthusiasm.

The payments company reported a fourth quarter 2016 net loss attributable to common stockholders of $15.2 million, or four cents per share, compared to a net loss of $80.5 million, or 34 cents per share, a year earlier. The S&P Capital IQ consensus normalized EPS for the fourth quarter of 2016 was nine cents per share.

BTIG LLC analyst Mark Palmer said Square had a strong quarter in all of the categories that investors care about. Palmer said the company's margins particularly impressed him. Square maintained pricing, even with larger merchants that typically have more pricing power, he added.

A 17% sequential increase in the line item that includes its small-business lending product, Square Capital; its Caviar food delivery service; and other ancillary services is notable for Square because those higher-margin items are likely drivers of future profitability, Palmer said.

"Even though it is a relatively small number in terms of revenue now, it bodes well for the company's future growth," he added.

Palmer upgraded the stock to "buy" with a $20 price target following the earnings release.

In addition to the upgrade from Palmer, Square's stock jumped more than 14% the day after disclosing earnings results and its 2017 outlook.

In the regulatory space, the SEC published guidance on robo-advisers for financial services investors. The investor bulletin touches on topics like levels of human interaction, as well as fees and charges.

In a proposed budget for fiscal years 2017 and 2018, New York Governor Andrew Cuomo made changes to the New York Banking Law that could give the New York Department of Financial Services more licensing power over online lenders, according to The National Law Review.

Outside of the U.S. fintech space, Bank of Canada senior deputy governor Carolyn Wilkins said the central bank is open to more fintech "experiments" like its blockchain-based payment system, Reuters reported.

Allstate Corp. said it added a capability that allows customers with Amazon's Alexa devices to find their next bill's due date or help them find the closest Allstate agency office.

From February 16 to February 23, the SNL U.S. Financial Technology Index rose 0.96%.

Fintech weekly price change compared to S&P 500, S&P 500 Financials

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Oct 11, 2016
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