Deutsche Bank analyst Bryan Keane lowered the firm’s price target on Block to $95 from $155 and keeps a Buy rating on the shares. In recent months Block has continued to make progress linking its three primary ecosystems, Square, Cash App, and Afterpay, Keane tells investors in a research note. The analyst believes the largest opportunity is from broadening Cash App Pay acceptance to a wider audience of merchants, resulting in the creation of another widely used digital wallet that functions similar to Alipay or WeChat in Asia. He calls Cash App Pay a “potential sleeping giant.” The addition of Cash App Pay could push Cash App gross profit growth rates well above 20% annually, says Keane. Despite the market’s near-term focus on the macro headwinds “where Block continues to hold up better than feared,” its medium term outlook “remains extremely promising,” he writes. Keane cites lower peer group valuations for the target drop.
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