Jefferies analysts maintained the firm's Buy rating and $80 price target on Block Inc (NYSE:SQ) shares in a note Thursday, telling investors that the pain points are alleviating.
The analysts stated they see a "uniquely favorable set-up" for SQ, despite the challenging backdrop.
They noted that seller GPV has reaccelerated, while easier comps ahead suggest further acceleration is possible, and the spread vs. V/MA volumes should continue to widen.
In addition, they said the implied deceleration in Cash App's April update was likely conservatism, setting up second-quarter upside, while Jefferies sees SQ's FY adj. EBITDA being raised more aggressively this quarter.
"Beyond macro sensitivity, the primary source of investor angst surrounding SQ has been the trajectory of Seller GPV growth. GPV growth has compressed relative to V/MA US volume over the last year, and save for an acceleration in January on lapping omicron, growth has been on a steep downtrend since 1Q22. This dynamic has finally reversed," the analysts wrote. "Seller GPV has grown 12% Y/Y QTD through May (per an intra-qtr update), and May accelerated from April."