Yahoo Finance Live anchors discuss a Baird analyst’s Outperform rating on the Block stock.
BRIAN SOZZI: On the move to kick off this new year, shares of Block in focus this morning following Baird's upgrade on the shares. Boosting it from neutral to outperform with a price target set to $78.
The headline here for Block, guys, Baird saying, this is a comeback story. And yeah, after really a bad year of slowing growth rate over there at Block, of course, the stock was hammered, they're looking for this stock to gain ground this year.
BRAD SMITH: Yeah, they also said within this that they believe Block is a Premier large-cap growth franchise, both profitability and net cash, benefits from macro trends, including rising rates. And then one thing to keep an eye on is, of course, the subscriber funds that they're able to take in as well on each of those transactions when you're either engaging with Cash App or even on the point of sale system that Block has for so many of those square processors.
It really does come down to how they're continuing to grow at that merchant base. And then on the Cash App side, just continuing to hold on to the amount of net users that they have. They really pride themselves on a younger demographic there. And that's where you can get into the conversation, competition wise, of a PayPal versus a Block. And how they're going after different businesses and then those end users for their peer-to-peer transactions platforms, too.
JULIE HYMAN: I was just reflecting my mind on the decision to rename the company to Block from Square, which--
BRAD SMITH: Every time.
JULIE HYMAN: --did happen last--
BRAD SMITH: Yeah.
JULIE HYMAN: It happened in 2021, in late 2021 is when the decision was announced. And just like here is a well-known consumer name, consumer and business name, right? Because a lot of small businesses use it. And that just, in hindsight, I mean, even at the time there was a lot of criticism of that decision. In hindsight, it appears to be even a worse decision.
Obviously, this is a little bit to the-- this is a sidebar to this note. But just thinking about it as we get underway in 2023, just talking about what we were talking about with what happened in crypto and, you know, SBF is the symbol of that. You know.
BRAD SMITH: But that's what they were trying to give a nod to, I think, with the name change, blockchain, Block.
JULIE HYMAN: Right.
BRAD SMITH: And Jack Dorsey being so vocal about what he believes the future of crypto to be and how vocal he was, a major Bitcoin-- not just-- I mean, we talked about Bitcoin whales and how bullish they are, but he was bullish on the underlying technology of blockchain, too. And it's, I think, a question of how they're going to integrate that into their systems so that people actually realize the difference in the service when they come to use it, either on the merchant side or even on the P2P side.
BRIAN SOZZI: Yeah, and that premarket move we're seeing over here in Block it's just-- you know, I think it shows how far some of these once hot growth stocks were hammered last year and the potential appetite to come in here and buy strong franchises, like a Block-slash-a-Square, if Wall Street is seeing some trough in earnings or trough in sales at some point this year.
JULIE HYMAN: Yeah, you see the stock was down about 61% last year. So yeah. [LAUGHS] Brad just making a pained face at that. So--
BRAD SMITH: The yikes face.
JULIE HYMAN: --it would indeed have to represent a comeback story if that's-- if that was what was gonna happen for the company.