This crypto game is a Wall Street favorite, topping many 2025 pick lists
Investors are betting that shares of fintech company Block Inc. will increase further in the new year. Analysts at three separate Wall Street firms recently named Block, a provider of financial services through a technology platform, as one of their top ideas heading into 2025. Block is the parent company of Square point of sale systems for businesses, Cash App for businesses. peer-to-peer payments for consumers and buy now pay later for companies. Block’s shares have gained nearly 27% from 2024 through Wednesday, lagging the S&P 500’s 27.6% gain. But that hasn’t stopped the Street. For example, Bernstein, which has the lowest price target of the three firms recently touting Square, still predicts Block will rise to $120 next year, nearly 22% above Wednesday’s close. . Analyst Harshita Rawat recently raised his price target on the stock by a third from his previous forecast of $90. “Block is our best new idea yet,” Rawat wrote, pointing to three catalysts for the stock, from the growth of new distribution partnerships, recent product innovations and less harm from weak same-store sales. By 2025, Rawat estimates that Block can drive its gross profit growth into the mid-teens, pointing out that adjusted earnings will increase 49%, to 5, $59/share from $3.75 in 2024. The S&P 500 contender puts it all together, and Block, whose market value is now $63 billion, could soon be considered to join the S&P 500 index of the largest companies. “While it may be difficult to make a timely decision, we believe SQ has now checked all the criteria for S&P inclusion,” Rawat wrote. Similarly, last week Deutsche Bank increased its price target on Block by nearly 28% to $125 from $98, implying that the stock could gain another 27% over the next year. “We believe SQ is one of the best fundamentally positioned companies in our coverage and believe the stock can continue to appreciate during the year,” wrote Deutsche Bank analyst Bryan Keane. next”. In the note, Keane wrote that Square’s payment volume growth may have bottomed out, suggesting volumes will accelerate in October. Keane added: “We believe the preliminary guidance for the fiscal year SQ’s 2525 calling for gross profit growth of ~15% seems conservative, and we expect growth to accelerate during the year as the company continues to make progress on profitability.” Meanwhile, Square’s Afterpay integration could further boost the number of monthly active users and their engagement. Biggest gainer Even more bullish on Oakland, California-based Block is William Blair analyst Adam Klauber, who predicts shares could rise to between $140 and $150, in a base case scenario. yours. The higher end of that range implies a price gain of nearly 53% from Wednesday’s close. Klauber calls Square’s key valuation factor growth in total payment value, which he predicts could reach 10% in 2025 and 11% in 2026, up from 8% in 2024. Even if Meanwhile, he still calls those growth rates “conservative.” “We are pleased with management’s renewed focus on Square market share profitability, which we see is supported by a streamlined seller onboarding process, high retention rates,” the analyst wrote. better footing, growing distribution networks, moving to a single app, and new solutions, like ordering platforms.” Klauber added that Cash App could also continue to drive Block’s gross profit higher. In line with these views, about 67% of 45 Wall Street analysts rate Block the equivalent of a buy today, according to FactSet data. Still, it was the smallest percentage since October 2023. — CNBC’s Michael Bloom contributed to this report.
