©Reuters. BTIG raises block (SQ) on “growth opportunities”.stock profit
Block Inc. (SQ) shares rose in pre-market trading on Tuesday after analysts at BTIG upgraded the stock to a “neutral buy” rating, citing a focus on improving profitability and “growth opportunities for the company.” It rose 1.8%.
As such, analysts say SQ represents an “attractive investment opportunity with the stock trading at approximately 17x FY24E EV/adjusted EBITDA.”
BTIG said the core of its investment thesis is Block's strong presence in both the consumer and retail markets through its Cash App and Square platforms, and that both ecosystems will “become even stronger as the integration builds.” He said he is focused on possibilities.
“At the same time, we believe that the Cash App and Square ecosystems are strong as individual units and have a track record of delivering value that we expect to continue into FY24 and beyond,” the team said.
The broker also believes investors should not ignore Jack Dorsey's comments in Block's Q3 2023 shareholder letter, in which he said the company was “finally reaching Square within Cash App.” “We are starting to see more of this, or vice versa.”
Additionally, analysts believe that Cash App will maintain its position as a leading alternative to traditional banking, with a promising path to growth, especially by strengthening engagement with its current user base. listed.
For example, of Cash App's approximately 55 million monthly active users, only about 2 million take advantage of the borrowing feature, they wrote, indicating significant potential for expansion in this area. There is.
“We are also attracted to SQ's focus on costs, with the company aiming to achieve a mid-20% adjusted operating margin (including stock-based profits) by 2026. “We expect this to be consistent with investors increasingly focusing on GAAP profitability,” BTIG said.
