Block (SQ) Receives Strong Buy Rating Despite Lowered Price Target

Piper Sandler's Kevin Barker lowered their price target on Block (NYSE: SQ) by 7.2% from $83 to $77 on 2023/09/29. The analyst maintained their Strong Buy rating on the stock.

In a sector overview ahead of the Q3 earnings season, Barker provided a pre-print preview of names in their Financial (Mortgage and Consumer Finance) portfolio. According to Barker, consumer lenders and payment providers have underperformed the market due to heightened near-term recession fears caused by higher rates. The analyst expressed concern about growing unemployment during a recession, stating that it "remains a significant overhang for consumer lenders and the market in general." Furthermore, Barker predicted that expenditures may face a headwind in early 2024 due to rising interest rates and the return of student debt payments. Barker also anticipated a "subdued" valuation multiple for the sector until market conditions improve and comparables become more favorable.

In addition to the rating change for Block, Barker made the following adjustments to other names in their portfolio on September 29, 2023:

- Piper Sandler's Kevin Barker lowered their price target on Discover Financial Services by -3.8%, from $104 to $100, and maintained their Hold rating. - Piper Sandler's Kevin Barker lowered their price target on Paypal Holdings Inc by -13%, from $77 to $67, and maintained their Hold rating. - Piper Sandler's Kevin Barker raised their price target on Ally Financial Inc by 3.3%, from $30 to $31, and maintained their Hold rating. - Piper Sandler's Kevin Barker raised their price target on American Express Co by 0.7%, from $149 to $150, and maintained their Strong Sell rating.

Analyzing analyst ratings is one way investors can gauge the sentiment surrounding a particular stock. In the case of Block, Barker's decision to lower the price target while maintaining a Strong Buy rating suggests that while the analyst remains optimistic about the stock's long-term potential, they have revised their expectations for its near-term performance downward.

It is worth noting that 100% of top-rated analysts currently rate Block as a Strong Buy or Buy, with no analysts recommending a Hold or selling the stock. This consensus among top-rated analysts indicates a high level of confidence in the company's prospects.

Examining Block's recent performance, the stock price has experienced a decline of 33.5% since its last quarterly report on June 30, 2023. Year-over-year, the stock is down 20.8%. During this period, Block has trailed the performance of the S&P 500, which itself has experienced a decline of 17.8%.

Piper Sandler analyst Kevin Barker, who issued the rating change for Block, is ranked in the top 8% of Wall Street analysts by WallStreetZen. With an average return of 11.2% and a win rate of 55.6%, Barker specializes in the Real Estate, Financial Services, and Technology sectors.

Block Incorporated, formerly known as Square, Inc. until December 2021, is a San Francisco-based company that offers platforms enabling sellers to accept credit card payments. The company provides reporting, analytics, and next-day settlement services. Block's hardware products include a Magstripe reader, contactless and chip readers. The company also offers Cash App, which allows users to send, spend, and store money, and Afterpay, a buy-now-pay-later solution. Additionally, Block provides website hosting and domain name registration through its Weebly product. The company's developer platform includes application programming interfaces and software development kits.

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