Key points
- Stocks held onto gains following last week’s earnings report and bullish forward guidance.
- A series of analyst updates highlights the opportunity here.
- Investors should look for stocks to finish consolidating this week and begin moving higher starting Monday.
- 5 titles we like most about Block
Having had mostly lateral trades since January, Block, Inc. NYSE: sqm stocks are on the move again. They had performed strongly during the last two months of last year when, like almost all stocks, they took off on the back of cooling inflation data and hopes of an imminent rate cut.
This latest rise, which sees them trading at a two-year high, comes on the heels of a strong earnings report last week and bullish comments from analysts afterward. Last Thursday, Block, a well-known SMB fintech formerly known as Square, reported fourth-quarter results that beat analysts’ expectations on the revenue front and set the tone for what is expected to be a strong year. Revenue increased an impressive 24% year-over-year and well above consensus, which more than made up for the lack of trailing profits.
Bullish guidance for block stocks
It also helped that management’s forecast for full-year EBITDA came in at $2.63 billion, well above the previous forecast of $2.4 billion. A rosier-than-expected outlook on a key metric like this will outweigh almost any negative surprise regarding the previous quarter’s historical performance. Investors are forward-thinking, and with inflation continuing to cool, there are enough tailwinds for Block to continue rising through 2024.
This was a probability highlighted by the Seaport Research team, which upgraded its rating on Block shares following last week’s report. Having previously rated Block as Neutral, their team raised it to a bullish Buy rating, saying they “see ample opportunity for additional operating leverage from here.” Seaport also raised its 2024/25 forecast for Block’s EBITDA and expects the company’s continued fundamental fundamental strength to continue through 2026.
For those of us considering a position in Block, there is a lot of comfort to be received from bullish positions like these from analysts. Also recently joining the bullish camp is the Wells Fargo team, which, with its $95 price target, is looking for further upside of at least 16% from where the stock closed on Thursday. If Bloc shares manage to rise to that level in the coming weeks, they would be at multi-year highs and, in fact, the highest level since before the 2022 crash bottomed. They would also have gained more than 100% in value since the November low and would be on track to return to the triple-digit prices they spent much of 2020 and 2021 at.
Participate in Block Stock
The fact that stocks have weakened a bit after last week’s initial rally hasn’t hurt the bullish thesis at all. They have already turned north again, which means there is a solid support line underneath them, and there is real momentum starting to arrive with the earnings report having now been fully digested. Investors should feel comfortable starting to build a position around here and be ready to add to it if the Block breaks above the $82 line, as that is where the nearest resistance lies.
Considering that, in addition to Seaport and Wells Fargo, teams at Piper Sandler, Canaccord, and Citigroup have also taken bullish positions on Block’s prospects, with a high $100 price target coming from Truist Financial, it appears this could be the l ‘start of something big.
As stocks continue to benefit from the return of strong risk appetite, as investors continue to flock to stocks, now is the time to select those that are poised to outperform the most. When you have a stock like Block, which says it will do just that in the year ahead, but whose stock is just now getting ready to take off, you have to be ready to start backing the truck.
Before considering Block, you’ll want to hear this.
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