Is It Time to Buy Block Stock?
Block (NYSE:SQ) stock continues to climb off its 52-week low. Shares spiked 6% higher in early trading on Monday, April 4. The catalyst seems to be a price target upgrade from KeyCorp. The analyst firm boosted its target from $175 to $180. That would be a 34% increase from the SQ stock closing price on Friday, April 1. And the consensus price target for SQ stock is $212.47. That’s a healthy 59% increase from the stock’s current level.
Analyst upgrades are typically a bullish signal for investors. Analysts don’t like to get a call wrong. So when they increase a price target, it means they expect a stock price to move higher. This is the second bullish price target upgrade for SQ stock in the last week. On March 29, Mizuho raised its price target from $190 to $215. Block is covered by 36 analysts, which makes the consensus Buy rating carry that much more weight.
Another reason for investors to be bullish on the stock is that Block continues to add products to its menu. And more importantly, management indicates that Block customers are using these products. This is helping make Block sticky to its customers. The more products they use, the more integral it becomes for their business, which increases the cost of switching over.
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One note of caution would be that earnings growth is slowing in the past 12 months. In fact, in the last quarter, Block’s earnings-per-share (EPS) were lower on a year-over-year (YOY) basis. However, they did beat analysts’ expectations. And revenue beat analysts’ expectations and was also higher on a YOY basis.
Block is a favorite of retail investors. And with new products being introduced and international expansion likely to help the bottom line, now looks like the right time to scale into SQ stock. Investors who are still on the fence may get more clarity when Block reports first quarter earnings on May 5, 2022.
On the date of publication, Chris Markoch did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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