Block's Square, Cash App Poised For 2H-Weighted Profit Growth: Analyst

Shares of Block Inc XYZ continued to tank in early trading on Monday, after having lost around 20% last week.

The sell-off in the company's stock following the release of fourth-quarter results has created an "attractive entry point," according to BMO Capital Markets.

The Block Analyst: Analyst Rufus Hone upgraded the rating for Block from Market Perform to Outperform, while raising the price target from $100 to $89.

The Block Thesis: While market sentiment is now "more balanced," there is less downside risk to Street estimates, Hone said in the upgrade note.

Check out other analyst stock ratings.

Square appears well-positioned to benefit from "product innovations, incremental distribution enhancements, and the refreshed sales strategy," which could drive gross profit and gross payment volume higher, the analyst stated.

"Square’s 4Q24 GPV growth was a bright spot, coming in slightly better than expected (driven by better U.S. trends), while near-term GP growth expectations have moderated," he wrote.

Growth in Cash App's average revenue per user (ARPU) could remain robust, "driven by strong contributions from Cash App Borrow, BNPL, Cash App Pay and Afterpay on Cash App Card, underpinning a pronounced GP acceleration," Hone further said. The acceleration in gross profits could be back-end weighted, he added.

Price Action: Shares of Block had declined by 4.67% to $65.16 at the time of publication on Monday.

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