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On Friday, BTIG analyst Andrew Harte maintained a Sell rating on Block Inc. (NYSE: SQ) with a consistent price target of $110.00, notably higher than the current stock price of $54.04. The firm’s stance remained unchanged despite Block’s recent announcement that its subsidiary, Square Financial Services Inc. (SFS), has received approval from the Federal Deposit Insurance Corporation (FDIC) to extend consumer loan services through its Cash App Borrow feature. According to InvestingPro data, while BTIG maintains its Sell rating, the broader analyst consensus is more optimistic, with 10 analysts recently revising their earnings expectations.
Harte highlighted the strategic advantage SFS provides Block, offering both regulatory and operational flexibility. The approval for Cash App to offer its Borrow product on a national scale was cited as a clear example of the operational flexibility that SFS contributes to the company. Despite acknowledging the potential benefits of SFS to Block, BTIG’s price target and rating did not shift. Block maintains strong financial health with a current ratio of 2.33, indicating solid liquidity to support its expansion plans.
The analyst expressed confidence in Block’s ability to grow its Gross Profit (GP) by approximately 15% over the next two years, while also significantly increasing operating margins. This growth projection aligns with Block’s recent performance, showing a revenue growth of 10.06% in the last twelve months and a healthy gross profit margin of 37.14%. This growth is expected to be fueled by the company’s efforts to further develop relationships with Cash App users, with the Borrow feature being a key initiative, and with Square merchants. For deeper insights into Block’s growth metrics and financial health, InvestingPro subscribers have access to over 30 additional key metrics and analysis tools.
BTIG has selected Block Inc. as its Large-Cap Top Pick, indicating a positive outlook on the company’s performance potential. Nevertheless, the firm’s estimates for Block remain unchanged, and the Sell rating suggests caution from BTIG’s perspective regarding the stock’s current valuation relative to its future growth prospects. The stock currently trades at a P/E ratio of 11.63, with analyst price targets ranging from $40 to $125, reflecting the market’s mixed sentiment about its valuation.
In other recent news, Block, Inc. announced that its subsidiary, Square Financial Services, has received approval from the Federal Deposit Insurance Corporation to offer Cash App Borrow, a consumer loan product, across the United States. This development allows the company to directly service and originate these loans, which had nearly $9 billion in originations in 2024. Meanwhile, Citi analysts have adjusted their outlook on Block Inc., lowering the price target to $90 while maintaining a Buy rating, highlighting the need for Block to demonstrate stabilization and growth within its Seller ecosystem. Additionally, Block Inc. is set to adopt NVIDIA (NASDAQ:NVDA)’s DGX SuperPOD technology to advance its open-source generative AI research, marking a significant step in its technology strategy.
Furthermore, Morgan Stanley (NYSE:MS) has upgraded Block’s stock from Underweight to Equalweight, setting a new price target of $65, reflecting a more balanced risk/reward profile. Piper Sandler also revised its price target for Block to $85 from $101, maintaining an Overweight rating despite Block’s recent earnings falling short of expectations. The firm noted that Block’s adjusted EBITDA exceeded consensus estimates, and the company is optimistic about future growth, particularly with Cash App and Afterpay. These updates reflect Block’s ongoing efforts to expand its product offerings and leverage technology to drive growth.
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