KEY POINTS

  • Following last week’s second-quarter earnings release, forecasters have revised their ratings of Block.
  • Block outperformed Wall Street estimates for the period, even though it was on a downward price target adjustment.

What’s going on with Block stock

Investors kicked Block stock down on the second trading day after Block (NYSE:SQ) announced its second-quarter results. Several analysts reduced their price targets on the former fintech industry leader in an apparent response to the results. Investors were afraid, and the company’s stock price tumbled by 2.5%, surpassing the minor drop in the S&P 500 Index (^GSPC) on Monday.

Why we care

After counting, it appears that six market analysts kicked Block stock down on the first trading day of the week.

Of that group, the one with Block at its lowest point is Morgan Stanley‘s (NYSE:MS) James Faucette. He reduced his price from $110 to $85, keeping an equal-weight (neutral) recommendation throughout the process.

Despite its more bullish viewpoint on Block, another investment bank, Goldman Sachs (NASDAQ:GS), is making a similar move. Michael Ng, a Goldman Sachs stock forecaster, now thinks the stock is worth $134 per share, down from his previous $152 price target. However, he’s still maintaining his buy recommendation.

What now

Although many analysts delivered price target cuts to the fintech yesterday, Block stock held up remarkably well.

Perhaps there are still some investors who were inspired rather than discouraged by the success of their firm’s most recent quarterly report. After all, Block exceeded analyst expectations for the quarter, albeit not spectacularly, and showed encouraging growth in several key metrics.

Block’s POS terminals are still widely used in small companies, many of which were hit hard by the coronavirus pandemic and are still recovering. Furthermore, Block is continuing to expand its merchant services ecosystem, making its services more “sticky” and generating additional sources of income.

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