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On Tuesday, Mizuho (NYSE:MFG) Securities maintained its positive stance on Block Inc. (NYSE: SQ), formerly known as Square, by increasing the stock’s price target from $68.00 to $71.00, while reiterating an Outperform rating. Currently trading at $58.74, Block shows potential upside according to InvestingPro’s Fair Value analysis, with analyst targets ranging from $35 to $105. Mizuho’s decision comes in the wake of a proprietary analysis indicating a correlation between Bitcoin prices and user engagement on Block’s Cash App.
The analysis highlighted that the recent surge in Bitcoin’s value has likely spurred an increase in weekly active users of Cash App, particularly noting an uptick in activity during late April and early May. This follows a period of slower growth in February and March. The analysts’ findings align with statements from Block’s management, which also pointed to a rebound in Cash App usage in April.
Bitcoin’s impressive climb, recently surpassing the $110,000 mark, is expected to continue fueling momentum for Cash App. This is anticipated to lead to stronger monthly active user (MAU) figures and heightened user engagement. The raised price target to $71 reflects Mizuho’s optimism about Cash App’s performance in the second quarter, which is predicted to exceed expectations. The firm’s analysts believe that this positive outcome will be particularly well-received by investors, given the conservative guidance previously issued by Block that had accounted for potential softening in consumer activity. The company maintains strong financials with a healthy current ratio of 2.27 and generated $23.9 billion in revenue over the last twelve months.
In other recent news, Block Inc. reported significant developments that have drawn attention from various analysts and investors. Fitch Ratings has upgraded Block’s Long-Term Issuer Default Rating from ’BB+’ to ’BBB-’, citing the company’s substantial growth and improved profitability. This upgrade reflects Block’s decreasing financial leverage and improved cash generation. Meanwhile, Wolfe Research has raised its price target for Block to $75, maintaining an Outperform rating due to the company’s strong adjusted net income growth and favorable valuation multiples. However, Macquarie analysts have downgraded Block from Outperform to Neutral, reducing the price target to $50, highlighting concerns about the company’s recent financial performance and macroeconomic challenges.
Jefferies has maintained a Buy rating with a $60 price target, noting improvements in Block’s credit losses and the performance of its lending products like Afterpay. In contrast, Seaport Global downgraded Block from Buy to Neutral after disappointing first-quarter results and reduced full-year guidance, specifically pointing to challenges with the Cash App. These mixed analyst opinions reflect the varied outlooks on Block’s ability to navigate current economic conditions and its future growth prospects. Investors will be closely monitoring Block’s financial health and strategic execution in the coming months.
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