Block Receives Positive Assessment from Bernstein as EBITDA Projections Increase
Block Inc. received a positive assessment from Bernstein on Tuesday, as the research firm maintained its Outperform rating on the stock with a steady price target of $85.00. Bernstein’s analysis highlights Block’s significant revision in EBITDA expectations and operational expenditure discipline, which have led to a 30% increase in EBITDA projections since the last earnings report.
While the company has experienced some concerns, including a deceleration in gross profit growth and uncertainty in its long-term trajectory, Bernstein remains optimistic about Block’s ability to sustain mid-teens growth in gross profit in the coming years. The firm believes that recent growth pains are more reflective of internal issues rather than market size or competitive challenges.
For the Square seller business, Bernstein expects growth in gross profit driven by continuous improvements in market strategies. The stagnation in Cash App user inflows and monetization is seen as a temporary setback, with potential growth expected from the scaling of recent product launches and new offerings.
According to InvestingPro data, Block holds a market capitalization of $42.38 billion, underlining its significant industry presence. Although the company has not been profitable over the last twelve months, it has demonstrated robust revenue growth of 22.61%, indicating potential for future profitability. InvestingPro Tips also suggest expected net income growth for Block this year, aligning with Bernstein’s positive outlook on the company’s growth prospects and EBITDA revisions.
Furthermore, Block maintains a strong liquidity position, with liquid assets exceeding short-term obligations. However, investors should be aware of the stock’s volatility. With a 32.33% return over the last three months contrasted against a 10.39% decline over the past year, Block’s stock performance indicates a positive trend amidst longer-term challenges.
Analyst comment
Positive news: Bernstein gives a positive assessment of Block Inc., maintaining an “Outperform” rating and steady price target. The analysis highlights increased EBITDA projections and improved operational expenditure discipline. The firm is optimistic about sustained mid-teens growth in gross profit and expects growth in the Square seller business. Block also demonstrates robust revenue growth and holds a strong liquidity position.
Market prediction: The market for Block Inc. is expected to perform well in the coming months due to positive assessment from Bernstein, increased EBITDA projections, and sustained mid-teens growth in gross profit. The company’s strong revenue growth and liquidity position further support its potential for future profitability. However, investors should be cautious of the stock’s volatility.
