1 Wall Street Analyst Thinks Block (Square) Is Going to $96. Is It a Buy Around $71?

Phillip Securities upgraded Block in the aftermath of its earnings report last week.

The stock market reacted to Block‘s (SQ 3.06%) first-quarter earnings report last week. The fintech stock initially jumped out of the gate as Wall Street applauded better-than-expected results on the top and bottom lines, but the gains didn’t stick. By the end of the day on May 3, the stock was down 1%.

However, one Wall Street analyst is doubling down on the initial bullish response to the results, upgrading the stock and raising its price target on the parent company of Square and Cash App.

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Phillip Securities upgrades Block to buy

Phillip raised its rating from accumulate to buy on Block, arguing that the post-earnings weakness in the share price made it more attractive. It also raised its price target on the stock from $94 to $96, implying an upside of 35%.

The research firm also noted a pattern of margin expansion from the company and Cash App’s ability to serve as a bank for lower-income and underbanked consumers.

Can it get to $96?

After years of distractions and questionable acquisitions including Afterpay and Tidal, Block has delivered a string of solid results. In the first quarter, it reported a 22% increase in gross profit to $2.1 billion, with balanced growth at both Square and Cash App.

Bottom-line results were also strong as adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) nearly doubled to $705 million. The company also raised its EBITDA forecast for the year.

Overall, the results show the company is continuing to deliver solid growth, but Wall Street has been skeptical of fintech stocks amid broader economic uncertainty. If the economy strengthens and Block reports steady growth, the stock should move closer to $96 a share.

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