S&P 500 may face selling pressure as systematic funds reach full exposure
Investing.com - Wolfe Research has reiterated an Outperform rating on Block Inc. (NYSE:XYZ) with a price target of $95.00, as the stock currently trades at $76.16. The strong Buy consensus from analysts (1.83 rating) and InvestingPro’s analysis suggest the stock is currently undervalued, highlighting the company’s technological innovation as a key factor for potential market share growth.
The research firm views Block as one of the more innovative companies in its coverage universe, with technological differentiation expected to support market share gains across both its Square and Cash App businesses over the long term. With a market capitalization of $46.51 billion and a healthy current ratio of 2.27, Block maintains a strong financial position to support its growth initiatives.
Wolfe Research acknowledges some uncertainty in Block’s business, particularly regarding Square, noting that evidence of stability or inflection in Gross Payment Volume (GPV) and Gross Profit (GP) growth remains important for the stock’s long-term outperformance.
Recent Cash App initiatives, including banking and direct deposit features, have potential to drive significant inflows into Block’s ecosystem, supporting more sustainable growth while possibly exceeding market expectations, according to the research firm.
Block anticipates achieving the "rule-of-40" financial benchmark by fiscal year 2026, driven by adjusted operating income margin expansion, with Wolfe’s price target based on approximately 27 times its calendar year 2026 stock-based compensation-expensed earnings per share estimate of $3.56. With earnings scheduled in just 3 days, InvestingPro subscribers can access comprehensive analysis and 10+ additional ProTips to make informed investment decisions.
In other recent news, Block Inc. is set to join the S&P 500 index, replacing Hess (NYSE:HES) following Chevron (NYSE:CVX)’s acquisition of the energy producer. This change will take effect before trading begins on July 23. Analysts at both Bernstein and JPMorgan have raised their price targets for Block to $90, citing the company’s upcoming inclusion in the index as a significant factor. Bernstein maintains an Outperform rating, while JPMorgan holds an Overweight rating on the stock.
Additionally, Block has introduced a new feature called "pools" on its Cash App platform, which simplifies group payment collections. This functionality allows multiple contributors to chip in using various payment methods and helps organizers track contributions in real time. These developments highlight Block’s ongoing efforts to enhance its financial technology offerings and its growing presence in the financial markets.
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