Block shares gain on improved Seller growth outlook and attractive 2026E valuation

EditorAhmed Abdulazez Abdulkadir
Published 06/01/2025, 11:20 pm
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On Monday, Raymond (NS:RYMD) James restated an Outperform rating for Block Inc. (NYSE:SQ), currently trading at $92.16 with a market capitalization of $57.12 billion, with a maintained price target of $115.00. The firm's analysts highlighted their optimism for the company's future, particularly its Seller Gross Payment Volume (GPV) growth, which they expect to accelerate into double digits in 2025. They noted that Block's stock has outperformed in recent months, rising by 42% compared to the S&P 500's slight decline.

The analysts believe that Block's valuation is attractive, trading at approximately a 15% discount to its peers based on 2026 estimated EBITDA, including Stock-Based Compensation (SBC). According to InvestingPro analysis, Block appears undervalued compared to its Fair Value, despite trading at a P/E ratio of 53.9x. They predict that the ease of comparisons, new sales momentum from improved distribution, international expansion, and product innovation will contribute to the anticipated growth in Seller GPV.

The firm also anticipates that estimates for the company may be adjusted upwards throughout the year, with potential for modest upside to the current market estimate of approximately 14% growth in Seller GP in 2025. They consider the expectations for margin expansion of about 230 basis points to be reasonable, suggesting a sustainable incremental margin.

While acknowledging that the Cash App component presents some uncertainty due to flat growth in new active users over the last two quarters, the analysts remain confident. They believe that focusing on engaging the existing customer base will support gross profit growth even if user growth stalls.

In summary, Raymond James expressed high confidence in Block's ability to accelerate Seller GPV growth into double digits by 2025. They also feel that the current stock estimates are well-positioned and that the favorable risk/reward profile of the stock makes it a top pick for the year 2025.

In other recent news, Block Inc. has been receiving positive attention from multiple analyst firms. Raymond James upgraded Block's stock rating to Outperform, based on a detailed analysis of the company's Seller Gross Payment Volume.

Simultaneously, Bernstein SocGen Group maintained an Outperform rating, noting Block's potential growth from Bitcoin-related endeavors and other factors. Monness, Crespi, Hardt shifted its rating from Neutral to Buy, emphasizing robust growth in Cash App's monetization, user base, and inflows. Furthermore, BTIG set a new price target of $110, maintaining a Buy rating on Block's shares.

These upgrades come as Block Inc. reported strong financial performance, with a 19% increase in gross profit, reaching $2.25 billion, and an improved adjusted free cash flow of $1.5 billion. The company also expects a 14% year-over-year growth for Q4 2024.

In terms of product development, Block introduced a new inheritance feature for its Bitkey bitcoin wallet, simplifying the process of transferring digital assets to beneficiaries after the owner's passing.

Additionally, Block entered a strategic partnership with global foodservice distributor Sysco (NYSE:SYY) to offer advanced technology solutions to restaurants worldwide. The company also introduced new features designed to streamline restaurant operations and improve cash flow.

Looking forward, Block aims to achieve the Rule of 40 by 2026, focusing on mid-teens gross profit growth and a mid-20% adjusted operating income margin.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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