BMO upgrades Block on attractive entry point after Q4 sell-off

Investing.com -- BMO Capital Markets upgraded Block Inc to "Outperform" from "Market Perform" as it sees an attractive entry point after the stock’s sell-off on fourth-quarter earnings and a more balanced investor sentiment. Brokerage raised its price target on Block shares to $89.

Downside risk to Street estimates has eased, with expectations for gross profit growth at Square and Cash App now appearing more achievable.

BMO also sees potential for sentiment to improve through 2025 as Block accelerates gross profit growth across its ecosystem.

BMO highlighted Square’s positioning for growth through product innovations, distribution enhancements, and a refreshed sales strategy, while Cash App’s average revenue per user is expected to remain strong, supported by Cash App Borrow, BNPL, and Afterpay integration.

“We now believe sentiment is more balanced, skewing negative, and see room for improvement as XYZ executes. Importantly, we believe Cash App's moderating growth and gross profit mix shift towards credit, lending-based products are now squarely in focus,” analyst at BMO said.

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