This post was originally published on this site
https://i-invdn-com.investing.com/news/LYNXMPEA7D094_M.jpg
They believe the recent pullback in Block shares, which have fallen over 3% in 2023, and more than 20% in the last three months, reflects an attractive risk/reward.
“SQ reports 1Q on 5/4. Shares have lagged the S&P500 by 1,880bps since the short seller report on 3/23/23,” wrote the analysts. “As such, we believe that the print/guide could be a positive catalyst, with adj. EBITDA having the most significant upside potential. Trading at just 5x C23E EV/gross profit (GP), we believe SQ is undervalued, and business model resilience is underappreciated.”
In addition, they see more upside at Cash App than Seller:
“For Cash App, SQ guided for GP growth to moderate in March vs. the 50% in Jan/Feb due to lapping price increases, and BofA/Street are modeling 42%/39% for 1Q – consensus implies a significant deceleration in March to ~17%, which could be a little conservative,” they explained.
“At Seller, the Street’s 17% gross payment volume (GPV) growth estimate reflects modest acceleration against an easier comp, which seems plausible, though we are more comfortable modeling 15% given macro choppiness. Consensus estimates for 2Q Cash App GP seem quite reasonable to us.”
