Block Eyes Strong Growth, Anticipates Q1 Wins and Expands Ambitions for 2024: BofA Analyst

BofA Securities analyst Jason Kupferberg reiterated a Buy rating on Block, Inc SQ with a price target of $93.

The analyst said the company’s share underperformance ahead of its first-quarter earnings creates a compelling opportunity. Expectations are set for in-line first-quarter gross profit and an adjusted EBITDA that could exceed forecasts and positively impact the full year. 

Kupferberg reiterated a Buy rating due to the platform’s scarcity value and attractive valuation, anticipating significant multiple expansion if Square achieves its 2026 “Rule of 40” targets. 

The analyst expects in-line+ first-quarter results, and estimates for the second quarter appear reasonable. Last quarter, Square projected “at least” 15% gross profit growth for 2024, and given ongoing cost control, there’s potential for an upward revision in the profitability outlook, Kupferberg flagged. 

He noted that critical metrics across both Square and Cash App segments will be closely monitored, including gross payment volume and international growth for Square, and monthly active users and monetization rates for Cash App. 

Kupferberg highlighted that Square has guided gross profit to be around $2.00-$2.02 billion for the first quarter, indicating about 17% year-over-year growth at the midpoint. Both Square and Cash App are expected to show moderated growth compared to the fourth quarter. 

With continued operating expense discipline, Square’s adjusted EBITDA for the first quarter will likely be at the high end of its guidance. 

The analyst added that Square has set ambitious goals for fiscal 2024 to exceed its adjusted operating income and EBITDA targets, demonstrating an intent to outperform its “Rule of 29” from fiscal 2023 and improve further.

Price Action: SQ shares traded higher by 1.99% at $71.82 on the last check Monday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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