What happened

There's bad news and good news (and more bad news) for investors in fintech powerhouse Block (SQ -1.08%) today.

The bad news: Investment bank Jefferies just cut its price target on the stock by 33%, to just $70 a share.  

The good news: $70 a share is still 26.5% more than what Block stock is selling for today, and so Jefferies recommends buying the stock despite the price-target cut.

And the other bad news: As of 11:15 a.m. ET on Wednessday, Block stock is down 3.4%.

So what

Why is Block stock going down on a day when Jefferies says it should be going up?

This is simply the direction that Block stock has been heading ever since reporting declining revenue in its second quarter earnings report in August. Growth investors aren't often fans of declining revenue, and with the troubles the cryptocurrency market has been having lately, and Block's decision to venture into crypto (which accounted for all of the sales decline last quarter), investors might be wondering if Block is headed for another miss when it reports earnings again early next month.

But here's some more good news: At $55 and change, Block stock is approaching trough-level valuations last seen in March 2020. And while "approaching" could be in the eye of the beholder (Block traded as low as $38 per share back then), even so, Block's revenue stream today is about three times bigger than it was back then. So arguably the stock should be worth a bit more today.

Now what

And indeed, Jefferies thinks it is worth nearly twice more, at its estimated $70 price target. According to the analyst, investors are "more than discounting the bevy of perceived risks" in Block stock today.

It's expected to report $0.24 per share in pro forma profit, and according to estimates collected by S&P Global Market Intelligence, it will generate $86 million in positive free cash flow. Even if Square just hits its estimates for the third quarter, that should be more than enough to send Block stock back moving higher once again.

Which brings us to the best news of all: Jefferies expects that the company will hit its numbers next month, and if so, Block's long wait in the wilderness might be at an end, and the stock will rise again.