Analyst James Faucette of Morgan Stanley maintained a Hold rating on Block, retaining the price target of $77.00.
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James Faucette has given his Hold rating due to a combination of factors influencing Block’s performance. The company’s growth prospects, particularly for the second half of the year, rely heavily on the expansion of its Borrow product, which requires a significant increase in originations and active users. While there is potential for growth, the quality and valuation of this expansion are viewed skeptically by some investors, who believe it may not add substantial value to the stock.
Additionally, the anticipated acceleration in Cash App’s growth is seen as challenging, with limited upside potential. The need for near-perfect execution across various initiatives, including the Cash App Card and Buy Now, Pay Later (BNPL) services, adds to the uncertainty. Despite a strong performance in the second quarter, driven largely by Borrow and BNPL, the sentiment around the stock remains cautious, contributing to its weaker performance. These factors collectively justify the Hold rating, as the potential rewards are balanced by the risks and execution challenges.
In another report released on September 16, TR | OpenAI – 4o also reiterated a Hold rating on the stock with a $81.00 price target.