On Wednesday, Block Inc. (NYSE:SQ) saw its price target increase by KeyBanc from $80.00 to $95.00, with the firm maintaining an Overweight rating on the stock. The adjustment reflects Block's strong position in the point-of-sale (POS) software market, both for in-store and online applications. The new price target is based on a multiple of 6.6 times the forecasted FY24 enterprise value to gross profit (EV/GP) and 21.9 times the forecasted FY24 enterprise value to EBITDA (EV/EBITDA).
KeyBanc's decision comes in light of Block's healthy market share lead among users of POS software, which has also led to increased consideration of Block as a customer relationship management (CRM) tool. The current trading multiple for Block is at 5.6 times FY24 EV/GP and 20.8 times FY24 EV/EBITDA. This is in contrast to the peer group average multiple, which stands at 10.3 times FY24 EV/GP and 36.8 times FY24 EV/EBITDA.
The firm's analysis indicates that Block is outperforming in the POS sector, which has been a significant factor in the revised price target. The Overweight rating suggests that KeyBanc anticipates the stock to perform better than the average return of the stocks that KeyBanc covers over the next 12 to 18 months.
The revised price target of $95.00 represents KeyBanc's confidence in Block's future performance and its ability to maintain and grow its market share in the POS and CRM domains. The firm's analysis projects a positive outlook for Block Inc. as it continues to trade in the financial markets.
InvestingPro Insights
With Block Inc. (NYSE:SQ) receiving an updated price target from KeyBanc, investors might be keen on understanding the company's current financial health and market performance. According to InvestingPro data, Block's market capitalization stands at a robust $51.84 billion. The company's revenue has shown a healthy growth of 25.01% over the last twelve months as of Q4 2023, indicating a strong upward trajectory in its financial performance. This growth is further evidenced by a significant 89.85% price total return over the last six months, demonstrating investor confidence and market momentum.
InvestingPro Tips highlight that Block is expected to see net income growth this year and continues to be a prominent player in the Financial Services industry. With analysts predicting profitability for the current year and the company having been profitable over the last twelve months, the future looks promising for Block Inc. Additionally, Block's liquid assets exceed its short-term obligations, providing financial stability and reassurance for investors.
For those looking to delve deeper into Block's potential and gather more insights, InvestingPro offers additional tips on their platform. Currently, there are 9 more InvestingPro Tips available for Block Inc., which investors can access to inform their investment decisions. To explore these insights and benefit from an expert analysis, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at https://www.investing.com/pro/SQ.
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