On Monday, UBS reaffirmed its Buy rating and $95.00 stock price target for Block Inc. (NYSE:SQ), the financial technology company formerly known as Square. The endorsement follows meetings in Europe with Block’s Chief Financial Officer, Amrita Ahuja, and Investor Relations lead, Tori Winders.
The discussions with Block's executives left UBS with a positive outlook on the company's strategic measures aimed at expanding its two key performance indicators: Square's Gross Payment Volume (GPV) and Cash App's paycheck direct deposit users.
Block is focusing on product and platform enhancements, as well as increasing its distribution through local in-market sales teams and potential new partnerships, which are expected to support GPV growth. This comes despite the anticipated reduction in discretionary same-store sales headwinds and weaker market trends.
Additionally, the Cash App segment is reportedly assembling features to better compete for direct deposit users by bundling core services and offering recurring user benefits. The segment may also see growth from newer offerings such as Cash Card's Buy Now, Pay Later (BNPL) option currently in beta testing, Cash App Pay, which has approximately 3 million users and an annualized volume of about $2.5 billion as of December, and other forthcoming products like a secured credit card.
UBS also noted the company's recent structural reorganization, transitioning from a general manager-focused approach to a functional model, which has led to cultural shifts and strategic hires. According to UBS, these changes are helping Block return to its foundational principles, which is expected to enhance the company's agility, decision-making capabilities, and cost efficiency.
These internal improvements are occurring alongside investments in sales and customer support to foster further growth.
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