MarketMoodz
Truist Upgrades Block to Buy on Growth Momentum and Cheaper Valuation
Truist Securities has upgraded Block (SQ) to Buy from Hold, citing stronger growth momentum and a cheaper valuation. Analyst Matthew Coad lifts the price target to $77 from $72, signaling roughly 29% upside.
Key Takeaways
- Truist Securities upgrades Block (SQ) to Buy from Hold and raises the target to $77 from $72, implying about 29% upside.
- The note links Block's ~40% workforce reduction to a de-rating, putting it at roughly 12x 2027 EPS.
- Q4 volume grew 27% year over year, signaling improving business momentum.
- Cash App MTAs rose by 2 million in two quarters, after about 57 million previously, aided by Cash App Borrow and Cash App Green.
- US new business applications rose 15% year over year, with international growth lifting overall volume.
People Involved
- Matthew Coad Truist Securities Analyst
Entities Involved
- Block, Inc. (SQ) Payments technology company at the center of the upgrade
- Truist Securities Equity research arm issuing the upgrade
MarketMoodz Analysis
The upgrade matters for investors because it shifts Block from a de-rated, growth-constrained stock to a name with a clearer path to margin expansion and free cash flow, supported by Cash App monetization and international expansion. A $77 target implies meaningful upside if the company sustains top-line momentum and improves profitability.
Block has been pivoting toward lending and monetization of Cash App, a strategy that has weighed on margins in the near term but could unlock stronger FCF if monetization scales. The comparison landscape—peers like PayPal and Adyen—highlights the balance Block must strike between growth and profitability amid regulatory and crypto-related risks.
Watch for Block's ongoing monetization progress, Cash App MTAs and user metrics, and the trajectory of US applications and international volumes, all of which feed into a potential re-rating as rates normalize.
Source: Original Article
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