JFrog stock rises as Cantor Fitzgerald maintains Overweight rating after strong Q2
On Monday, BMO Capital Markets adjusted its stance on Block Inc. (NYSE: SQ), formerly known as Square, upgrading the company’s stock rating from Market Perform to Outperform. The upgrade comes despite a reduction in the price target from $100.00 to $89.00. Analysts at BMO Capital cited the recent fourth-quarter sell-off as creating an attractive entry point for investors into Block’s shares. According to InvestingPro data, Block’s stock has declined nearly 19% year-to-date, and analysis suggests the stock is currently trading below its Fair Value, presenting a potential opportunity for investors.
The firm’s analysts have pointed out that there is now less downside risk to Street estimates for the company, and they believe that the market sentiment and positioning around Block have become more balanced. The revision in expectations for the gross profit growth of Block’s Square and Cash App segments is now deemed more achievable by the analysts. With a robust gross profit margin of 37% and annual revenue of $24.1 billion, Block maintains strong fundamentals. InvestingPro subscribers can access 12 additional key insights about Block’s financial health and market position, along with comprehensive valuation analysis in the Pro Research Report.
After the third quarter of 2024, Block’s spending on sales and marketing (S&M) as well as research and development (R&D) has been incorporated into financial models, while gross profit and adjusted EBITDA estimates have seen a low single-digit percentage decline. BMO Capital suggests that there is potential for investor sentiment towards Block to improve throughout 2025 as the Cash App and Square segments are expected to accelerate their gross profit growth.
Lastly, the analysts highlighted Block’s current valuation as attractive, especially if estimates have indeed found a floor. They noted that Block’s shares are trading at a price-to-earnings-growth (PEG) ratio of less than 0.7 times. The combination of these factors led to the decision to upgrade Block’s stock rating to Outperform and set a new price target of $89.00. With a P/E ratio of 40.28x and a market capitalization of $38.75 billion, Block remains a significant player in the financial technology sector. For detailed valuation metrics and comprehensive analysis, investors can access Block’s full financial health scorecard on InvestingPro.
In other recent news, Block Inc. reported its fourth-quarter 2024 earnings, which fell short of analyst expectations. The company announced an earnings per share (EPS) of $0.71, missing the forecasted $0.86, and revenue of $6.03 billion, below the anticipated $6.24 billion. Despite these setbacks, Block’s full-year gross profit grew by 18% year-over-year, with Adjusted EBITDA rising by 69% to $3.03 billion. Looking ahead, Block aims for a gross profit of at least $10.22 billion in 2025, representing a projected growth of 15%.
Several analyst firms have weighed in on Block’s prospects. UBS adjusted its price target for Block to $97, maintaining a Buy rating, while TD Cowen reiterated a Buy rating with a $115 target, citing confidence in the company’s growth narrative for the latter half of 2025. RBC Capital Markets maintained an Outperform rating with a $110 target, highlighting product innovation and go-to-market execution as key performance drivers. Keefe, Bruyette & Woods lowered their price target to $87, maintaining a Market Perform rating but noting anticipated growth acceleration later in the year.
Block’s strategic initiatives include the launch of a new Afterpay-enabled Cash App Card product, which is expected to drive gross margin improvement. The company is also investing in expanding its sales force and marketing efforts for the Square and Cash App ecosystems. Despite the mixed financial results, Block’s management remains optimistic about its growth trajectory, supported by ongoing product and marketing initiatives.
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