4 Block Analysts Offer Q4 Print Insights: Solid Results, Encouraging Profit Metrics

Shares of Block Inc SQ climbed during Friday’s premarket session on fourth-quarter results.

• Canaccord Genuity analyst Joseph Vafi reiterated a Buy rating and price target of $150.
• Needham analyst Mayank Tandon maintained a Buy rating, while raising the price target from $80 to $95.
• KeyBanc Capital Markets analyst Josh Beck reaffirmed an Overweight rating and price target of $100.
• Bank of America analyst Jason Kupferberg maintained a Buy rating and price target of $96.

Check out other analyst stock ratings.

Canaccord Genuity

• “Barring the macro impact on Square GPV, key metrics across the main business lines continue to trend in the right direction,” Vafi wrote in a note. “Cash App once again had its highest quarterly inflows ever at $54B, a 20% y/y increase as adoption of Cash Card and Direct Deposit continues to grow,” he further said.
• “The goal is to deliver gross profit retention of over 100% and achieve Rule of 40 on gross profit growth + adj. operating margin,” the analyst mentioned. “We think the pieces are there to deliver on this,” he added.

Needham

• Block’s fourth-quarter top- and bottom-line results were above expectations, “as impressive results in Cash App offset softer Seller results as FX headwinds and lower spending in discretionary verticals pressured volumes in mid-November and early December,” Tandon said in a note.
• “In addition, the company resumed providing annual EBITDA guidance, with the outlook calling for ~100 bps of margin expansion and $1.3B in EBITDA,” the analyst wrote. “We believe that the commitment to margin expansion and increased visibility into the model will be welcomed by investors, especially in a choppy market,” he added.

KeyBanc Capital Markets

• “SQ reported gross profit a touch ahead and beat on EBITDA by ~24% led by Cash App GP ex-BNPL/BTC of $715M partially offset by seller GP ex-BNPL of $703M trailing the Street at $728M while BNPL GP of $196M came in ahead of the Street at $121M,” Beck said.
• “Cash App 2023 growth is expected across all three primary drivers of MAU, inflows per MAU, and monetization rate, consistent with our preview,” he added.

BofA Securities

• Block’s results were solid and management commentary around new profitability metrics was encouraging, Kupferberg said.
• The company’s announced investment framework “will likely be well received,” he added.

SQ Price Action: Shares of Block had risen by 5.53% to $78.25 during the premarket session on Friday.