What happened

Shares of Block (SQ -1.57%) traded lower Thursday, slipping by as much as 7.5%. As of 11:59 a.m. ET, the stock was down 3.9%.

The broader market was in a slump today, which was no doubt a contributing factor in the stock's drop, but the bearish sentiment of a Wall Street analyst further fueled the decline.

So what

Truist analyst Andrew Jeffrey lowered Block's price target to $105 from $145, while maintaining a buy rating on the stock, according to The Fly. Yet, even with the lower price target, this still represents potential gains for investors of roughly 64% compared to Block's closing price on Wednesday. It's also important to point out that the analyst's bearish view was part of a broader research note addressing the headwinds faced by the IT services sector. 

Jeffrey pointed out that while Truist remains bullish for the long term for digitally native stocks, the ongoing downturn presents challenges, particularly for "safe haven" traditional payment networks. The analyst also suggested legacy payment processors offer the least attractive risk/reward profile, sharing near-term challenges and margin risk.

The news wasn't all bad. Jeffrey noted that Block is the analyst's "favorite large cap fintech" stock and will emerge as the most important software integrated payment processor and a leading neobank.

Now what

It's easy to see why Jeffrey holds that view. Block has products that serve both the merchant- and consumer-facing segments of the market. Its ubiquitous Square card reader is the go-to payment processing system for small and growing merchants and entrepreneurs and the Cash App now accounts for nearly half the company's gross profit.

In the first quarter, Block's total net revenue grew 44% year over year -- excluding the volatility inherent with its Bitcoin transactions -- which illustrates that even in the face of economic headwinds, Block continues to grow. The company's recent acquisition of buy now, pay later specialist Afterpay further expands its suite of products and services, strengthening its position in the quickly growing fintech space. 

Block stock will no doubt face headwinds caused by the economic downturn, but given its large and growing ecosystem, Block stock is a buy for investors with a long-term outlook.