Seaport Global Securities Upgrades Block Inc. (SQ) to Buy, 'Driving Profitable Growth And Also Delivering Above Expectations'

Seaport Global Securities analyst Jeff Cantwell upgraded Block Inc. (NYSE: SQ) from Neutral to Buy with a price target of $95.00.

The analyst comments "SQ's progress over the past several months in terms of streamlining itself organizationally, sharpening its focus within its two key businesses Square and Cash App, and becoming hyper-focused on driving profitable growth has been impressive - and we think there's more to go. The company's financial results this quarter demonstrated excellence in execution: adj. EBITDA of $562MM was a record for SQ in a quarter and beat us/Street by 25% as adj. EBITDA margin was 28%, +1100bps vs. the same quarter last year. Looking ahead, with SQ now under its 12K employee cap (and expected to stay there) and further expansion in Square's and Cash App's gross profit also in the cards, in our view, we see ample opportunity for further operating leverage from here. We also highlight SQ's guide for '24 adj. EBITDA of $2.63B was well above what we/the Street had expected into earnings, and implies robust growth of over 45% Y/Y this year, with headroom. Bottom line, we're taking our forecasts for adj. EBITDA up for '24/'25, and we now see SQ as being well on its way to executing against its Rule of 40 framework by '26. For the shares, risk/reward seems reasonable to us here, and we see room for further upside. Upgrading to Buy (from Neutral): PT of $95 is based on 16x '25 EV/EBITDA."

For an analyst ratings summary and ratings history on Block Inc. click here. For more ratings news on Block Inc. click here.

Shares of Block Inc. closed at $67.96 yesterday.

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