Cash App Leads The Way On Block's Earnings Beat: What Do 4 Analysts Think About The Stock?

Block Inc SQ reported better-than-expected first-quarter earnings on Thursday after market close. 

Here’s what investors need to know about the company and what the analysts think about the stock.

By The Numbers: Block reported year-over-year revenue growth of 26% to $4.99 billion, beating the average analyst estimate of $4.59 billion. Excluding Bitcoin revenue, the company's revenue increased by 27% year-over-year.

The company issued earnings of 40 cents per share, ahead of the 34 cent consensus.

Transaction-based revenue increased by 15%, while subscription and services-based revenue grew by 42%. Gross profit of $1.71 billion was 32.4% higher year-over-year, beating both consensus estimates and KeyBanc's forecasts.

The company had $7.6 billion in liquidity at the end of the quarter.

Check Out Block's quote page.

The Susquehanna Analyst: James Friedman gave Block a Positive rating, with a $100 price target.

The analyst praised Block’s performance, noting that Cash App gross profits grew by 49%, with inflows per active rising 8% year-over-year to $1,136.

Friedman said Cash App's growth was driven by the high adoption rate of Cash App Card and Direct Deposit, and the analyst expects the trend to continue. Friedman did note the Seller segment gross profits grew only 16%, below Susquehanna's forecasts of 26%.

The Raymond James Analyst: John Davis maintained his Market Perform rating on Block, citing concerns over the macro backdrop and the company's premium valuation.

Davis acknowledged the impressive first quarter results and the encouraging April trends, with QTD consolidated gross profit growth trending 300 basis points ahead of the Street. The analyst said Cash App gross profits beat Raymond James’ estimates, and that the Seller business performed better than expected.

The Needham Capital Markets Analyst: Mayank Tandon reiterated a Buy rating, and set a $80 price target on the stock, down from $95.

Tandon remained positive on Block, citing the strong momentum in the Cash App business, which offset the softer Seller trends. The company raised its FY23 EBITDA guidance due to the strong start to the year and increased focus on profitability.

Despite the economic climate's pressure, Tandon views the stock as favorable.

The KeyBanc Analyst: Josh Beck reiterated an Overweight rating and lowered the price target from $85 to $75.

Beck noted that Block’s ecosystem has expanded, and EBITDA nudged higher.

Block raised its FY23 EBITDA guidance to $1.36 billion from $1.3 billion, and Beck noted Square GPV increased by 3 points to 17% year-over-year, and the company is gaining market share.

SQ Price action: Shares of Block are trading 1.36% lower to $59.61 Friday at publication, according to Benzinga Pro.

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