In a report released today, Trevor Williams from Jefferies maintained a Buy rating on Block, with a price target of $90.00.
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Trevor Williams has given his Buy rating due to a combination of factors that suggest potential for Block’s stock to regain momentum in the coming quarters. Despite the current narrative being less optimistic due to Cash App’s reliance on lending and a complex gross profit growth algorithm, there are indications of future growth. The acceleration in Cash App’s gross profit, particularly driven by lending, is expected to continue, with significant growth projected for the coming years.
Moreover, there is potential for Square’s gross profit to eventually outpace its gross payment volume, which could be clarified by the mid-November investor day. Additionally, the strategic positioning of lending as a core product rather than a standalone growth driver could lead to positive effects, such as increased inflows per active user and a boost in paycheck direct deposit activity. These factors, combined with expectations of returning monthly active user growth in the second half, contribute to a high floor for the stock and justify the Buy rating.
In another report released yesterday, Mizuho Securities also maintained a Buy rating on the stock with a $88.00 price target.