MELBOURNE, AUSTRALIA - APRIL 11: (AUSTRALIA OUT) Jack Dorsey, co-founder and CEO of Square and Twitter, is interviewed at Five & Dime Bagel on April 11, 2016 in Melbourne, Australia. Dorsey is visiting Australia for the first time. (Photo by Louis Ascui/Fairfax Media via Getty Images via Getty Images)MELBOURNE, AUSTRALIA - APRIL 11: (AUSTRALIA OUT) Jack Dorsey, co-founder and CEO of Square and Twitter, is interviewed at Five & Dime Bagel on April 11, 2016 in Melbourne, Australia. Dorsey is visiting Australia for the first time. (Photo by Louis Ascui/Fairfax Media via Getty Images via Getty Images)

View photos

Jack Dorsey, co-founder and CEO of Square and Twitter, is interviewed at Five & Dime Bagel on April 11, 2016 in Melbourne, Australia. (Photo by Louis Ascui/Fairfax Media via Getty Images via Getty Images)

Square shares are up 146% in 2020 so far, and analysts at Oppenheimer think the stock can still go higher.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="On Thursday, Oppenheimer upgraded Square (SQ) to outperform, with a price target of $185. (The all-time high was $166 on Sept. 1.) The upgrade is based on Square’s Cash App and its prospects to help merchants transition to e-commerce. Square was trading at around $152 on Thursday.” data-reactid=”33″>On Thursday, Oppenheimer upgraded Square (SQ) to outperform, with a price target of $185. (The all-time high was $166 on Sept. 1.) The upgrade is based on Square’s Cash App and its prospects to help merchants transition to e-commerce. Square was trading at around $152 on Thursday.

But really, the note is a post-pandemic vote of confidence.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="As Oppenheimer notes, the COVID-19 pandemic has initiated a “massive shift in digital commerce, requiring merchants to rapidly adopt omni-channel solutions.” Of course, it was already obvious before the pandemic that the retail landscape was barreling toward e-commerce, but the pandemic has sent the trend into hyperdrive. Walmart, Target, and Best Buy reported enormous surges (100%+) in digital sales in Q2; online crafts retailer Etsy blew out its Q2 earnings; Dick’s Sporting Goods is thriving thanks to a combination of online sales and curbside pickup orders.” data-reactid=”35″>As Oppenheimer notes, the COVID-19 pandemic has initiated a “massive shift in digital commerce, requiring merchants to rapidly adopt omni-channel solutions.” Of course, it was already obvious before the pandemic that the retail landscape was barreling toward e-commerce, but the pandemic has sent the trend into hyperdrive. Walmart, Target, and Best Buy reported enormous surges (100%+) in digital sales in Q2; online crafts retailer Etsy blew out its Q2 earnings; Dick’s Sporting Goods is thriving thanks to a combination of online sales and curbside pickup orders.

All of those are big retail names. But Square’s bread and butter are SMBs (small and medium-sized businesses), which also now see the need to immediately prioritize their e-commerce presence, if they didn’t already. Hundreds of thousands of small business have shut down due to the pandemic, but those that have survived will need to beef up their digital presence.

Oppenheimer believes Square is well-suited to serve those small businesses coming out of the pandemic, positioning Square “for outsized share gains as economic activity normalizes.”

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Oppenheimer pegs Square’s TAM (total addressable market, the “it” tech stat of the moment) at $160 billion, and within that puts Cash App’s TAM at $63 billion, noting that “by reinvesting profits from prior Cash App cohorts, combined with its seller ecosystem, Square can develop significant network effects and products that will be challenging for other neo-banks to replicate in the digital wallet space.” (In other words, Square has an advantage over banks in the mobile payments race.)” data-reactid=”38″>Oppenheimer pegs Square’s TAM (total addressable market, the “it” tech stat of the moment) at $160 billion, and within that puts Cash App’s TAM at $63 billion, noting that “by reinvesting profits from prior Cash App cohorts, combined with its seller ecosystem, Square can develop significant network effects and products that will be challenging for other neo-banks to replicate in the digital wallet space.” (In other words, Square has an advantage over banks in the mobile payments race.)

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Oppenheimer also notes the “impressive volume and gross profit growth” of Cash App’s bitcoin trading feature. Square enabled bitcoin trading within Cash App in 2018 and Square had $875 million in bitcoin revenue in the second quarter, up 600% year over year, and $17 million in bitcoin gross profit, up 711% year over year. “What’s intriguing to us is that every cohort grew in 2019,” says Oppenheimer, mentioning the bitcoin revenue growth as proof of “the scalability in the Cash App business model.”” data-reactid=”39″>Oppenheimer also notes the “impressive volume and gross profit growth” of Cash App’s bitcoin trading feature. Square enabled bitcoin trading within Cash App in 2018 and Square had $875 million in bitcoin revenue in the second quarter, up 600% year over year, and $17 million in bitcoin gross profit, up 711% year over year. “What’s intriguing to us is that every cohort grew in 2019,” says Oppenheimer, mentioning the bitcoin revenue growth as proof of “the scalability in the Cash App business model.”

A Square credit card reader sits on top of an iPad. Square, a mobile payment service which allows merchants to more easily and cheaply accept credit card payments is being used at Cafe Grumpy, a coffee shop in New York. Square recently partnered with coffee giant Starbucks to offer payment services in their stores. (Photo by James Leynse/Corbis via Getty Images)A Square credit card reader sits on top of an iPad. Square, a mobile payment service which allows merchants to more easily and cheaply accept credit card payments is being used at Cafe Grumpy, a coffee shop in New York. Square recently partnered with coffee giant Starbucks to offer payment services in their stores. (Photo by James Leynse/Corbis via Getty Images)

View photos

A Square credit card reader sits on top of an iPad. (Photo by James Leynse/Corbis via Getty Images)

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Bitcoin has been a noted (and some believe problematic) obsession of CEO Jack Dorsey.” data-reactid=”60″>Bitcoin has been a noted (and some believe problematic) obsession of CEO Jack Dorsey.

Square has always touted that it serves both sides of the small business equation: sellers (i.e., businesses, through its point of sale hardware, payroll software, and Square Capital loan business) and shoppers (consumers paying with Square devices and/or using Cash App). Oppenheimer writes that this “two-sided network” will make Square “a structural winner during the recovery.”

Of course, there’s an obvious downside case against Square: “Economic pressures persist longer than anticipated” if the pandemic drags on or even worsens, hitting small businesses harder; “competitive responses dampen growth,” and Square certainly has big competitors, including FIS (which acquired Worldpay last year), PayPal, ShopKeep, and Shopify; and if “new product launches and adoption slow,” which will be up to Dorsey and Square’s own pace of innovation.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Oppenheimer sees Square profit growing at a 37% annual rate from the end of 2020 through the end of 2022. Square was Yahoo Finance’s Company of the Year in 2018.” data-reactid=”63″>Oppenheimer sees Square profit growing at a 37% annual rate from the end of 2020 through the end of 2022. Square was Yahoo Finance’s Company of the Year in 2018.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Daniel Roberts is an editor-at-large at Yahoo Finance and closely covers fintech and payments. Follow him on Twitter at @readDanwrite.” data-reactid=”65″>Daniel Roberts is an editor-at-large at Yahoo Finance and closely covers fintech and payments. Follow him on Twitter at @readDanwrite.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Read more:” data-reactid=”66″>Read more:

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Why bitcoin and altcoins are hot again this summer” data-reactid=”67″>Why bitcoin and altcoins are hot again this summer

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="What you need to know about Ant Financial, potentially the largest IPO in history” data-reactid=”68″>What you need to know about Ant Financial, potentially the largest IPO in history

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Ant Financial’s core product Alipay hits the 1 billion users mark” data-reactid=”69″>Ant Financial’s core product Alipay hits the 1 billion users mark

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Etsy CEO on huge Q2: Etsy is ‘becoming much more mainstream’” data-reactid=”70″>Etsy CEO on huge Q2: Etsy is ‘becoming much more mainstream’

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Amazon tells employees to delete Tik Tok, then says email was ‘sent in error’” data-reactid=”71″>Amazon tells employees to delete Tik Tok, then says email was ‘sent in error’

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Why Square’s embrace of bitcoin was ‘brilliant’” data-reactid=”72″>Why Square’s embrace of bitcoin was ‘brilliant’

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Square is Yahoo Finance’s 2018 Company of the Year” data-reactid=”73″>Square is Yahoo Finance’s 2018 Company of the Year