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This digital payments firm is getting positive views from analysts

on Feb 25, 2022
  • Block Inc reported solid Q4 revenue and gave upbeat future guidance.
  • Analysts reiterated their top ratings on the stock after the earnings call.
  • Shares of the American digital payments company are up 25% on Friday.

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Block Inc (NYSE: SQ) shares are up 25% this morning on promising outlook for the Cash App. Formerly known as Square, the digital payments company also reported better-than-expected Q4 revenue last night.

Block’s guidance for the future

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Block expects its gross profit from the Cash App to jump 21% YoY in January and February. The financial services firm expects both its business (Cash App and Square Seller) to grow sequentially in each quarter this year and forecasts gross-profit growth rate to be stronger in the back half of 2022.

The upbeat guidance saw Susquehanna’s James Friedman reiterate his “buy” rating on Block. The analyst wrote:

Fears that Cash App users would not outlast stimulus checks seem to have been overblown as users and engagement metrics look strong.

Friedman slashed his price target to $240 but that still represents an over 100% upside from here. Bernstein’s Rawat and SMBC’s Bauch were among other analysts that reiterated their top ratings on the stock after the earnings call.

Important figures in Block’s Q4 results

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  • Net loss came in at $76.8 million versus $294 million in earnings a year-ago.
  • Per-share loss stood at 17 cents, a decline from 59 cents of earnings in the same quarter last year.
  • At $4.08 billion, revenue was up 29% on a year-over-year basis.
  • FactSet consensus was for $4.04 billion in revenue in the recent quarter.
  • Revenue from transactions and services was up 41% and 72%, respectively.
  • Gross profit from Cash App and Square Seller handily topped expectations.

Cash App had 44 million active transacting users in December. Block’s gross payment volume at $46.3 billion was in line with the FactSet consensus. Last month, Wolfe Research’s Darrin Peller said fintech could outperform in 2022.

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