Shares of the mobile payment company Square (NYSE: SQ) have surged 222% in 2017, including 13% last week alone following the announcement that it would begin testing bitcoin on its app and a big analyst upgrade.
Evercore ISI upgraded Square to outperform on Friday and doubled its price target, citing Square's "new products with strong, omni-channel capabilities."
Despite the rally, one Miller Tabak analyst believes the red hot tech stock will soon cool off.
"It's [trading] at a 90% premium to its 200-day moving average," Matt Maley told the media last week "You look at Facebook (NASDAQ: FB) and during its first two years as a public company, it didn't get to a premium even half that big."
Square, led by Twitter CEO Jack Dorsey, celebrated its second anniversary of being public over the weekend with the stock up nearly 400% from its $9 IPO price.
"It's getting very stretched, and unless you think this is the next Facebook, this stock is going to have to pull back a bit before it goes any higher," Maley said. "And I question if it can go any higher from here at least in the near term."
According to recent data, 53% of Wall Street analysts covering Square have a buy rating on the stock, though the average price target is $38.56, well below Friday's levels.
The stock opened trading on the first day of an abbreviated week at $45.08, up 90 cents, or 2%, from Friday’s close.
