Block Inc. is a mixed bag of companies, but better synergies between them could send the stock soaring.
At least, that’s the opinion of BTIG analyst Andrew Harte, who updated the SQ value of Block’s shares,
buy from neutral on Tuesday after recently taking coverage of the name. He has a new $85 price target on the shares, about 22% above current levels.
“Our primary investment thesis focuses on SQ’s attractive position between consumer and merchant with its Cash App and Square ecosystems, and the potential for each segment to grow stronger as integrations are built between them,” he wrote in a note to customers.
Block investors may have heard this story before. The company, which hosts not only the Cash App mobile wallet and Square merchant processing business but also the Afterpay buy-now-pay-later platform, has been talking about better integration of its core businesses by at least 2022, Harte notes .
But he thinks the company is “positioning itself to integrate the segments more significantly during 2024,” fitting into recent comments from Jack Dorsey, the company’s head. In the company’s latest letter to shareholders, he wrote that there was “finally … a prospect of seeing more Square within Cash App” and vice versa.
Harte also likes the prospects for these businesses alone.
“We expect Cash App to continue to provide a best-in-class banking replacement and see an attractive growth runway from deeper engagement with existing customers,” he wrote, noting that only about 2 million of the 55 million active users monthly of the company use the company’s Borrow loans. characteristic.
Meanwhile, he’s encouraged that Dorsey now oversees Square’s merchant unit in addition to running the broader company. “Just as we expect the Cash App ecosystem to continue to innovate, we expect the same for Square and believe Dorsey’s comments that the sales platform will prove to be the company’s superpower with “major breakouts coming in 2024” they involve a focus on promoting productivity and enabling growth through banking-related products,” Harte wrote.
Block shares rose 1.6% shortly after Tuesday’s open.