BofA Securities analyst Jason Kupferberg reiterated a Buy rating on Block, Inc. SQ, with a price forecast of $82.
The analyst maintains the bullish rating due to the company’s strong business model, scarcity value, and valuation, indicating a favorable setup for 2025 estimates.
The analyst notes that during the upcoming third-quarter results, gross payment volume (GPV) growth will be a key metric.
Kupferberg points out that the Street expects a slight miss for the third quarter, and fourth-quarter GPV projections may also be a “touch high.”
The analyst forecasts the profitability outlook to improve due to increased visibility and continued expense discipline, particularly by staying below the 12,000 headcount cap.
The Street’s projected 16% gross profit growth for the fourth quarter is achievable, although the firm plans to increase investments in the second half of the year.
In fact, Kupferberg forecasts that the company may maintain the 2024 gross profit growth guidance of over 18%.
However, given the fluctuations in in-store consumer spending, the Street’s forecast of 9% GPV growth for Square in the fourth quarter might be “touch aggressive,” Kupferberg adds.
On last year’s third-quarter earnings call, the company provided an initial 2024 guide for adjusted EBITDA and AOI. This year, the analyst underscores a probable similar approach to forward-year guidance.
Street is modeling 15% gross profit growth in FY25, as well as AOI margin of 20.5%, Kupferberg adds.
Price Action: SQ shares are trading lower by 2.33% to $71.12 at last check Wednesday.
Image via Unsplash
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