Analyst Downgrades Block, Says Market ‘Overvalues Cash App’ Stocks Fall By Investing.com
Analysts at Morgan Stanley downgraded shares of Block Inc. (SQ) from Equal Weight to Underweight on Thursday, citing “high market penetration and limited additional opportunities to expand Cash App’s banking/credit services.”
They also lowered their 12-month price target on the stock from $62 to $60.
Block shares fell 3.6% in premarket trading.
Morgan Stanley said the market is optimistic about SQ’s ability to significantly expand margins, primarily through cost savings, while achieving sustainable gross profit growth in the low teens of Cash App and reinvigorating growth in Square Seller volumes. I point out.
In contrast to this view, analysts at the Wall Street giant say they see “an incremental contribution through demographic analysis of the U.S. Gen Z and Millennial population, Cash App’s already high market penetration, and potential new credit cards and additional banking services.” You can.”
“Similarly, we are uncertain about Block’s ability to continue to re-accelerate Square Seller’s growth based on the medium-term headwinds we have identified,” the team wrote.
They now project Cash App gross profit forecast for Block for 2024 at $4.96 billion. This is down from the previous estimate of $4.993 billion and below the consensus of $5.054 billion.
The 2025 estimate is set at $5.503 billion, down from the original $5.795 billion and lower than the consensus of $5.923 billion. These adjustments project growth rates of 14% and 12% in 2024 and 2025, respectively.
