BMO Capital analyst Rufus Hone maintained a Buy rating on Block (XYZ – Research Report) yesterday and set a price target of $89.00.
Rufus Hone has given his Buy rating due to a combination of factors that suggest potential financial improvements for Block. The recent layoffs, impacting approximately 8% of the workforce, are projected to save around $350 million in total expenses, which could translate to about a 12% increase in adjusted operating income by 2025. This cost-saving measure is expected to be viewed positively by investors, as it may lead to a beat-and-raise cycle, enhancing the company’s financial outlook.
Despite concerns about the company’s ability to achieve its ambitious gross profit targets for 2025, Hone sees a more favorable risk-reward scenario following a recent sell-off. He highlights the potential for growth acceleration in the latter half of the year for Cash App and Square, which could lead to valuation multiple expansion. Additionally, with market sentiment becoming more balanced, there is an opportunity for improved investor perception, making the stock an attractive buy at this time.
According to TipRanks, Hone is a 5-star analyst with an average return of 13.1% and a 69.30% success rate. Hone covers the Financial sector, focusing on stocks such as Visa, Mastercard, and Western Union.