Block (SQ) Stock Falls Despite Earnings Beat, Analysts Remain Positive

August 5, 2022 5:33 AM EDT
Get Alerts SQ Hot Sheet
Price: $80.76 -5.54%

Rating Summary:
    40 Buy, 14 Hold, 1 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 8 | Down: 41 | New: 10
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Shares of Block Inc. (NYSE: SQ) are down more than 7% in premarket trading despite the company reporting better-than-expected top and bottom line results.

The digital payments company reported Q2 adjusted EPS of 18c, compared to 66c in the year-ago period and above the consensus estimates of 16c per share. Net revenue came in at $4.4 billion, down 5.9% YoY and above the analyst estimates of $4.34 billion.

Block generated $2.62 billion in Cash App revenue, down 21% YoY and topping the consensus projection of $4.34 billion.

The company said it expects GPV growth to reach 23% in July on a 3-year CAGR basis, in line with the 23% growth in Q2.

Evercore ISI analyst David Togut maintained an Outperform rating on SQ stock after Q2 results.

“Cash App gross profit growth appears poised to reaccelerate following the lapping of difficult comparisons tied to the year-earlier, one-time positive impacts from fiscal stimulus. SQ continues to be the most disruptive company in payments and banking, in our view. Rapid innovation should fuel continued TAM expansion. Afterpay should help reaccelerate Cash App gross profit growth combined with the integration of SQ’s Cash App and Seller ecosystems,” Togut said in a client note.

Credit Suisse analyst Timothy Chiodo raised his EBITDA estimates for Block and remains positive on the SQ stock.

“Cash App’s CAC (stable vs. 2021) and scale advantages (~47mm MAU, >15mm+ Cash Card holder~$2.65b in gross profit 2022E) position it well to remain a leading US digital financial services platform, particularly in an industry where we expect consolidation & rebundling around a core set of winners,” Chido told clients in a note.

By Senad Karaahmetovic

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