The investing world stands up and takes notice whenever a company beats Wall Street's earnings estimates. After all, stocks trade on expectations of their future results, not trailing performance.
That explains the renewed investor and analyst bullishness for fintech stock Block (SQ -0.26%), which offered up quarterly and full-year profitability guidance that crushed the market's projections. More than a few analysts were quick to raise their price targets for Block with one at a top bank upgrading the stock to buy.
Joining the bull stampede
Wells Fargo's Andrew Bauch changed his recommendation on Block from equal weight (hold) to overweight (buy) the day after the company reported fourth quarter and annual earnings for 2023. With the change of recommendation came a significant increase in Bauch's price target -- from $65 to $95 per share.
Bauch was impressed by the latest results, which featured non-GAAP (adjusted) net income that more than doubled year over year to $285 million in the fourth quarter. Net revenue also rose 25% to $5.77 billion.
The analyst also found much to like about Block's first-quarter guidance, which called for adjusted earnings before interest, taxes, depreciation, and amortization of $570 million to $590 million. That range came in above the average analyst estimate of $570 million.
NYSE: SQ
Key Data Points
Wells Fargo is on the money
In his analysis, Bauch highlighted Block's "reasonable" valuation and its clear strategy for keeping its growth train running. The company's point-of-sale payment terminals are now commonplace, and it effectively continues to build out an ecosystem of apps and services to complement them.
