What happened
High-profile fintech company Block (SQ +5.52%) took a bit of a hit to its share price on Tuesday, following a deep price target cut from an analyst. Investors reacted by trading the company's shares down slightly, by a bit over 1% on the day.
NYSE: SQ
Key Data Points
So what
The prognosticator using the scissors was UBS's (UBS +6.54%) Rayna Kumar, who now believes Block is worth $178 per share. While that's down considerably from her former level of $322, she's maintaining her buy recommendation on the fintech's stock.
Image source: Block.
Kumar cited concern about the company's recent blockbuster acquisition of "buy now, pay later" company Afterpay, a $29 billion deal that closed at the end of January. The analyst feels that Block is now a riskier proposition given the likelihood of interest rate hikes, plus increased regulatory oversight of that fast-growing segment.
Kumar isn't the only stock tracker cooling on Block's prospects. On Monday, D.A. Davidson's Christopher Brendler sliced his price target to $175 per share from the preceding $275. Brendler cited current market conditions as a chief reason for his move. Like Kumar, however, Brendler still sees potential in the shares and is thus keeping his buy recommendation intact.
Now what
Both price target cuts come in the wake of Block's fourth-quarter earnings release last Friday, which was generally greeted positively by analysts. The company's performance was good, which is probably a factor in the two analysts' maintaining their bullish outlooks. Block continues to grow robustly in areas where it counts, and it notched beats on the average analyst estimates for both revenue and net profit.
