This crypto play is a Wall Street darling, topping many 2025 picks lists
Investors are betting that shares of the fintech company Block Inc. will rally further in the new year. Analysts at three separate Wall Street firms recently named Block, a provider of financial services through technology platforms, as one of their top ideas heading into 2025. Block is the parent company of the Square point-of-sale system for businesses, Cash App for peer-to-peer payments by consumers and the buy now, pay later company Afterpay. Shares of Block have surged almost 27% in 2024 through Wednesday, lagging behind the 27.6% gain the S & P 500. But that’s not deterring the Street. Bernstein, for example, which has the lowest price target of the three firms that recently touted Square, still sees Block rising to $120 next year, almost 22% above Wednesday’s close. Analyst Harshita Rawat recently raised her price target on the stock by a third from her old forecast of $90. “Block is our best new idea,” Rawat wrote, pointing to three catalysts for the stock, from the development of new distribution partnerships, recent product enhancements and less harm from what had been weak same-store sales. For 2025, Rawat estimates that Block might boost its gross profit growth to the mid-teens, while pointing to a 49% increase in adjusted earnings, to $5.59 per share from $3.75 in 2024. S & P 500 candidate Put it all together, and Block, whose market value is already $63 billion, might soon be considered for entry into the S & P 500 index of the biggest companies. “Although it is hard to bake in a timing, we believe SQ now checks all the boxes for S & P inclusion,” Rawat wrote. Similarly, last week Deutsche Bank hiked its price target on Block nearly 28% to $125 from $98, implying that the stock might rise another 27% over the next year. “We believe SQ is one of the best fundamentally positioned companies in our coverage and believe the stock can continue to rally into next year,” Deutsche Bank analyst Bryan Keane wrote. In the note, Keane wrote that Square payments volume growth has likely already bottomed, pointing to an acceleration in volume in October. “We believe SQ’s preliminary FY25 guidance calling for ~15% gross profit growth looks conservative and we expect growth to accelerate through the year while the company continues to make strides on profitability,” Keane added. Meanwhile, Square’s integration of Afterpay could further boost monthly active users and their engagement. Most bulllish Even more bullish Oakland, Calif.-based Block is William Blair analyst Adam Klauber, who predicts the stock could rise to between $140 to $150, in his base case. The higher end of that range implies nearly 53% appreciation from Wednesday’s close. Klauber called Square’s key valuation driver its gross payment value growth, which he forecasts could reach 10% in 2025 and 11% in 2026, up from 8% in 2024. Even then, he calls those growth rates “conservative.” “We are pleased with management’s renewed focus on Square share gains, which we see powered by streamlined merchant onboarding, better retention, a growing distribution network, move to a single app, and new solutions, like the orders platform,” the analyst wrote. Klauber added that Cash App could also continue to drive Block’s gross profits higher. Echoing these sentiments, some 67% of the 45 Wall Street analysts covering Block rate it the equivalent of a buy today, according to FactSet data. Still, that’s the smallest percentage since October of 2023. — CNBC’s Michael Bloom contributed to this report.
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