- Citigroup analyst Peter Christiansen maintained Block Inc (NYSE:SQ) with a Buy and lowered the price target from $135 to $90.
- Christiansen believes SQ, now at all-time lows on an EV/GP and EV/EBITDA basis, represents a compelling buying opportunity.
- Key to 2023 will be efficiency gains, tighter discretionary spending, and slower hiring, which has already resulted in a 20%- 25% expense reduction in the last two quarters.
- Additionally, with 23%-24% gross profit growth expectations, the analyst estimate Block’s EBITDA margin could be near ~20% in 2023, up 500 bps YoY.
- The bulk of these gains will likely materialize in 2H’23 and 1H’24, leading the analyst to model a 40% 3-year EBITDA CAGR in a “soft landing” scenario.
- Against the stock’s EV/FYE’23 EBITDA of ~30x (consensus estimates), the analyst believes the stock is pricing deeper cyclicality.
- Now with normalizing earnings power, the analyst shifted the valuation framework to a forward EV/EBITDA multiple range of 35x-40x, commensurate with both pre-pandemic norms and expectations for a ~40% EBITDA 3YR CAGR.
- Price Action: SQ shares traded higher by 2.23% at $62.78 on the last check Wednesday.
Eli Lilly Increases FY24 Outlook, Joins Brinker International, Zebra Technologies, 3M And Other Big Stocks Moving Higher On Tuesday
U.S. stocks were lower, with the Dow Jones index falling over 100 points on Tuesday. Shares of Eli…
