Block (NYSE: SQ) Exceeds Expectations in Q1 2024, Analyst Sees Potential for Expansion

Citigroup's Peter Christiansen raised their price target on Block (NYSE: SQ) by 4.7% from $86 to $90 on 2024/05/06. The analyst maintained their Strong Buy rating on the stock.

Christiansen's decision to increase the price target comes after reviewing Block's first-quarter 2024 earnings report, which was dated May 1, 2024. The company's financial performance exceeded expectations, leading Christiansen to believe that its "earnings power potential" components are starting to materialize. The analyst envisions a storyline that is "more suited to numerous expansions."

In the first quarter of 2024, Block reported earnings per share (EPS) of $0.85, surpassing the Zacks Consensus Estimate of $0.62 by 37.1%. This figure also represents a significant increase of 112.5% compared to the first quarter of 2023 when EPS stood at $0.40. Additionally, Block's revenue for Q1 2024 amounted to $5.96 billion, beating the Zacks Consensus Estimate by 3.5% and showing a robust 19.4% increase from the same period last year when revenue reached $4.99 billion. The company's operating income for the quarter was $250 million.

Looking ahead, Block's management provided guidance for the second quarter of 2024 and the full fiscal year. For Q2 2024, the company expects a gross profit range of $2.165 billion to $2.185 billion and an operating income range of $305 million to $325 million. For the full fiscal year 2024, Block anticipates a gross profit of $8.78 billion, up from the previous projection of $8.65 billion. The company also revised its operating income guidance to $1.3 billion, compared to the previous estimate of $1.15 billion.

Founder and CEO Jack Dorsey expressed enthusiasm for the future of Block, emphasizing that the company's investment in Bitcoin goes beyond technology. Dorsey believes it is an investment in a future where economic empowerment becomes the norm. He stated, "This commitment drives our business into new territories, unlocking novel opportunities for our customers, and securing enduring value for you, our shareholders."

According to WallStreetZen, Christiansen is ranked in the top 22% of 4,575 Wall Street analysts. They have an impressive average return of 4.9% and a win rate of 66.7%. Christiansen specializes in analyzing the Real Estate and Communication Services sectors, among others.

Currently, 92.3% of the top-rated analysts recommend either a Strong Buy or Buy rating for Block. There are no analysts who consider it a Hold, and 7.7% of analysts recommend or strongly recommend selling the stock.

Since the release of Block's latest quarterly report on May 2, 2024, the stock price has increased by 4.6%. On a year-over-year basis, the stock is up 25.1%. However, during this period, Block has slightly trailed behind the S&P 500, which has seen a 25.2% increase.

Block, formerly known as Square, Inc. until December 2021, offers platforms that enable sellers to accept credit card payments. The company provides reporting, analytics, and next-day settlement services. Additionally, Block offers hardware products such as Magstripe readers and contactless and chip readers. The company's portfolio also includes Cash App, a platform that allows users to send, spend, and store money, and Afterpay, a buy-now-pay-later solution. Furthermore, Block offers Weebly, a product that provides website hosting and domain name registration services. The company also has a developer platform, which consists of application programming interfaces and software development kits. Block, Inc. was incorporated in 2009 and is headquartered in San Francisco, CA.

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