Here’s what Wall Street experts are saying about Block ahead of earnings

Block (SQ) is scheduled to report results for its third fiscal quarter after the market close on November 7, with a conference call scheduled for 5:00 pm EDT. What to watch for:

SELLER GPV RE-ACCELERATION: In an earnings preview research note, Wells Fargo says investors will once again be searching for evidence that a Seller GPV reacceleration can materialize in either Q4 2024 or Q1 2025. Intra-quarter headlines suggest that Block’s product revitalization efforts are on track, the firm argues. Wells reiterates an Overweight rating on Block with a price target of $85 on the shares.

CONSUMER SPEND DECELERATION: Late last month, Bernstein lowered the firm’s price target on Block to $90 from $100, while keeping an Outperform rating on the shares as part of a Q3 earnings preview for the payments space. Overall, consumer spend decelerated slightly to 5%, with 0.5% of deceleration of volumes in Q3 likely driven by lower gas prices, the firm tells investors in a research note. Bernstein says 2024 is shaping up to be a “narrative changing year for many payment companies as underlying secular growth slow (especially in the US), and competition intensifies.”

NEGATIVE 30-DAY CATALYST WATCH: Back on October 18, Citi placed Block on a “negative 30-day catalyst watch” but kept a Buy rating on the shares with a $90 price target Block may preview elements of its fiscal 2025 outlook when reporting Q3, potentially indicating increased merchant and user acquisition spending now that the company is ahead-of-schedule on its “Rule-of-40” goals, the firm tells investors in a research cenote. Citi believes there’s potential this action could put fiscal 2025 consensus expectations at risk.

SEVERAL CATALYSTS ON THE HORIZON: Deutsche Bank says the outlook for Block remains positive and the stock is well positioned to rally with “several catalysts on the horizon.” The seller business has faced challenges due to reduced discretionary spending and internal focus shifts, but the company is in the midst of a “perfect storm” across product and talent which, combined with new distribution channel partnerships and an increasingly likely soft landing, should lead to a material improvement in Square gross payment volume growth in the coming quarters, the firm tells investors in a research note. Deutsche believes further progress in “banking the base” within Cash App and the integration of Afterpay onto the Cash Card represent additional avenues for upside into fiscal 2025. It keeps a Buy rating on the shares with a $98 price target

OUTLOOK: During the last earnings conference call, Block said it saw Q3 gross profit up 17% to $2.22B, Q3 adjusted EBITDA of $695M and adjusted operating income of $320M. The company also raised its full year outlook, saying it sees gross profit of at least $8.89B.
Block said at the time that, “We are raising our full-year outlook to reflect outperformance in the second quarter and our improved expectations for the remainder of the year. For the full year, we expect gross profit of at least $8.89B, or 18% growth year-over-year. For Adjusted Operating Income, we expect at least $1.44B, or 16% margin for the full year. We remain focused on achieving Rule of 40 in 2026, which we calculate as gross profit growth plus Adjusted Operating Income margin. Our updated guidance for the full year equates to a Rule of 35, an increase compared to our prior guidance of Rule of 32 and an improvement compared to the prior year. Our outlook does not assume any additional macroeconomic deterioration, which could impact results. On a GAAP basis, we expect to recognize approximately $53 million in expenses related to amortization of intangible assets in each of the third and fourth quarters, based on the intangible assets as of June 30, 2024. These amounts may be affected by fluctuations in foreign exchange rates in future periods.”

Current consensus EPS and revenue forecasts for Block’s third quarter stand at 87c and $6.24B, respectively, according to data from Yahoo Finance.

SENTIMENT: Click here to check out the recent Media Buzz Sentiment on Block as measured by TipRanks.