Block Inc (SQ)

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Block (SQ) could 'comfortably achieve' +16% gross profit growth next year - Mizuho
By: Investing | December 12, 2023

Mizuho analysts raised the firm's price target for Block (SQ) to $99 from $90 per share in a note Tuesday, maintaining a Buy rating on the stock.

The investment company's meticulous bottom-up model will help underwrite Block's 2024 gross profit.

"Consider our granular bottom-up models for SQ's major ecosystems. The models suggest that SQ could comfortably achieve +16% total company GP growth next year," explained the analysts.

For Square, the Mizuho analysts said they used the "historical capture of incremental V & MA volumes to help predict nearly $3.5bn of GP (ex-BNPL) in 2024 (+12% growth)." For Cash App, they "model each individual product, including Instant Deposit, Cash Card, and others" and overall, "expect +18% GP growth to $4.2bn (ex-BNPL)."

"Together (including BNPL & Corporate), we estimate $8.7bn of total company GP in 2024 (+16% growth)," said the analysts, adding that the price target was lifted due to better cost control and increased comfort around medium-term GP growth.

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