Block Profits Likely To Bear Brunt Of Consumer Spend And User Slowdown In Cash App, UBS Analyst Says
Portfolio Pulse from Anusuya Lahiri
UBS analyst Rayna Kumar has downgraded Block Inc (NYSE:SQ) from Buy to Neutral and lowered the price target from $102 to $65. This is due to expected slowdown in gross profit growth in the second half of FY23E and FY24E, caused by softening consumer discretionary spending, slowdown in Cash App user growth, and moderation of Cash App monetization rates. Despite Block's progress on profitability, investors are more focused on gross profit growth potential. Block's shares are currently trading near a 5-year low EV/Gross Profit multiple of 4x.
September 06, 2023 | 6:03 pm
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Block Inc's stock has been downgraded by UBS due to expected slowdown in gross profit growth. The shares are currently trading near a 5-year low EV/Gross Profit multiple of 4x.
The downgrade by UBS analyst is based on the expected slowdown in gross profit growth due to softening consumer discretionary spending and slowdown in Cash App user growth. This has led to a decrease in the price target and a downgrade from Buy to Neutral. As a result, the stock price is likely to be negatively impacted in the short term.
CONFIDENCE 90
IMPORTANCE 80
RELEVANCE 100