Benzinga - Shares of Block Inc (NYSE: 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.
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.
- 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.
- “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.
- 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.
© 2023 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.