Block Inc. (SQ) Stock Surges Following Piper Sandler’s Overweight Rating and Impressive Q3 Results

Block Inc. (NYSE: SQ) saw a significant surge in its stock price on Monday, November 11, 2024, following Piper Sandler‘s decision to assume coverage of the company with an Overweight rating. The stock gained 2.3% in premarket trading and continued to rise, closing at $79.59, up 6.74% since Friday’s close[3].

The positive sentiment from Piper Sandler comes on the heels of Block Inc.’s Q3 earnings report, which showed earnings per share (EPS) of $0.88, in line with consensus estimates, although revenue fell short of expectations at $5.98 billion compared to the anticipated $6.24 billion. Despite the revenue miss, analysts highlighted the company’s impressive margin results, noting that Block achieved adjusted EBITDA results much healthier than expected.

Piper Sandler set a price target of $83 for Block Inc., based on a 19x CY25E EPS estimate. The firm praised Block’s robust track record of innovation and its position at the forefront of the software-enabled payment ecosystem. The analysts believe that Block will benefit from the continued shift to electronic payments and its strong performance in both its Square and Cash App segments.

The Square segment, which accounts for 34% of Q3 revenues, showed 12% growth in FY23 and maintained 47% gross margins in Q3. The Cash App segment, representing 66% of revenues, demonstrated 33% growth and 33% gross margins. Both segments are seen to have significant growth potential, with addressable market sizes of $130 billion+ for Square and $75 billion+ for Cash App.

Block Inc.’s strategic investments, including the acquisition of Afterpay and its early entry into Bitcoin, are also expected to provide additional upside. The company’s ability to cross-pollinate its offerings between its business and consumer ecosystems is viewed as a unique opportunity for further growth.