What happened
Shares of Block (SQ -1.97%) charged sharply higher Thursday, surging by as much as 9.6%. As of 2:10 p.m. ET, the stock was still up by 8.5%.
The catalysts that sent the fintech specialist higher were a number of optimistic takes by Wall Street analysts.
So what
Block held its investor day presentation on Wednesday, and several analysts came away from it with positive long-term outlooks about the company's prospects, according to The Fly.
Image source: Block.
Bank of America's Jason Kupferberg said Block offered a "compelling vision of how various components of its ecosystem will become increasingly connected and synergistic over time." He also cited the company's "keen focus on profits," calling its strategic vision "impressive." He was not surprised that, given the uncertainty of the current economic environment, Block chose not to offer multiyear guidance. Kupferberg maintained his buy rating on the stock, as well as his $132 price target for it -- 61% higher than Wednesday's closing price.
Morgan Stanley analyst James Faucette said the event reinforced his view that Block is on a path to "eventually [becoming] a bank." The presentation provided important insights into user engagement and adoption, cohort and unit economics, and how the various pieces contribute to profitability. He maintained his equal weight (hold) rating on the stock, saying he would prefer a quicker integration of Afterpay loans and faster progress in its international expansion. Faucette also trimmed his price target to $110, but that still anticipates gains of 34% over the next 12 months.
Wedbush's Moshe Katri said Block provided what he called a "detailed, fascinating view" into its market share potential and numerous monetization strategies, as well as the evolution of the company's various ecosystems. He has some concerns, however, including the recent slowdown in the growth of both CashApp and Afterpay. As a result, Katri lowered his price target to $100 from $140 while maintaining a neutral (hold) rating on the stock.
Now what
The takeaway here is that there are plenty of reasons to be bullish on Block, though the current economic environment could throw a wrench into the works. With a large and growing opportunity, Block looks like a buy for investors who have appropriate investing time horizons and a strong stomach for volatility.
