Block (SQ – Research Report), the Technology sector company, was revisited by a Wall Street analyst today. Analyst Gustavo Gala from Monness reiterated a Buy rating on the stock and has a $100.00 price target.
Gustavo Gala has given his Buy rating due to a combination of factors that suggest Block’s stock (SQ) is well-positioned for growth. The analyst highlights the company’s recent performance, where despite a slight post-earnings sell-off, the overall competitive advantage remains with Block. Looking at the short and long-term prospects, Gala believes the market setup entering the first quarter of 2024 is favorable. This optimism is supported by sustained spending in key sectors such as restaurants, retail, and beauty services. Moreover, although there has been a slight softening in Bloomberg Second Measure Data, it is largely attributed to weather-related impacts and regional biases that do not significantly affect Block’s primarily coastal user base. Gala also points to an expected continuation of the upward revision cycle for Block’s near-term earnings estimates, driven by strong historical EBITDA margins and projections that consensus estimates are likely to increase.
In terms of specific segment drivers, Gala emphasizes the growth potential within the Cash App ecosystem. The Cash App’s strategy to increase both the number of users and the usage of Cash App cards positions it for continued monetization and engagement. Gala notes that there are opportunities for enhanced average revenue per user (ARPU) through the introduction of a credit product, leveraging the credit-like features gained from the acquisition of Afterpay. This move could drive network effects between the Cash App and Seller ecosystems, which are not yet reflected in current estimates. Additionally, Gala disagrees with common bearish concerns about growth in the Seller segment, arguing that Square’s strategic shifts in go-to-market approaches, product parity with competitors, and streamlined leadership are likely to drive network effects and capture additional domestic opportunities, especially as competitors like Clover focus on international expansion.
In another report released today, Jefferies also assigned a Buy rating to the stock with a $100.00 price target.
Based on the recent corporate insider activity of 102 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of SQ in relation to earlier this year.
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Block (SQ) Company Description:
Founded in 2009, California-based Square, Inc. provides credit card payment processing solutions. The company’s commerce ecosystem offers point-of-sale software and hardware that helps sellers with payment and point-of-sale solutions.
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