Block Inc. (NYSE: SQ) Shares rose 23% on Friday after the company beat expectations with its fourth-quarter earnings report.

On Thursday afternoon, Block reported fourth-quarter adjusted EPS of $1.71, beating consensus analyst estimates of $1.66. Fourth-quarter revenue was $4.1 billion, in line with analysts’ expectations. Revenue increased by 29.1% compared to a year ago.

The company ended the year with 44 million average monthly users and 13 million monthly active debit card users, up 20% from a year ago.

Cash App generated $1.96 billion in Bitcoin (CRYPTO:BTC) during the quarter, up 12% year-over-year. The company also said it holds $371 million in Bitcoin on its balance sheet.

Looking ahead, Block has guided Square to grow gross payment volume by 35% in the months of January and February.

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Relief rally: Bank of America Analyst Jason Kupferberg said Friday’s relief rally in bloc stocks comes as no surprise.

“We continue to believe the stocks are undervalued based on our SOTP analysis and are considering the integration of the acquisition of Afterpay (APT), first quarter results and a recently announced investor day on May 18. as potential catalysts,” Kupferberg wrote.

Raymond James Analyst John Davis said Block’s Q1 commentary was better than expected.

“That said, March includes some particularly difficult stimulus-related comps, and while management expects the 2-year CAGR to accelerate in March, we note that gross margin growth could be negative d year-over-year, especially if the tax benefit is pushed back to April/May,” Davis wrote.

Change in Fintech sentiment: Analyst Rosenblatt Securities Sean Horgan said Block has a unique opportunity in the crypto payments space.

“Net/net, SQ is an innovative company that has historically been unafraid to disrupt the status quo and we believe it will continue to do so (perhaps most emphatically with crypto),” Horgan wrote.
KeyBanc Analyst Josh Beck said Block’s quarter could turn the tide of negative investor sentiment across the fintech market.

“We believe this quarter could serve as an offsetting event for the broader FinTech industry as sentiment shifts from the 2022 unknowns (e.g., tough comps, rising investments) to opportunity at higher levels. long term of digitizing/modernizing finance and commerce, which we believe SQ is uniquely positioned to execute on,” Beck wrote.

Needham Analyst Mayank Tandon said Square shares offer investors a favorable risk-reward balance for a stock with a big opportunity for secular growth.

“While SQ continues to hold back its guidance, we believe the company is well positioned to deliver robust growth over the next few years, and expect the recent acquisition of Afterpay to give SQ further leverage to accelerate. its international expansion and integrate BNPL products into both its seller and Ecosystems Cash App,” Tandon wrote.

Notes and price targets:

• Bank of America has a buy rating and a target of $185.
• Raymond James has a Market Perform rating.
• Rosenblatt Securities has a buy rating and a target of $210.
• KeyBanc has an overweight rating and a target of $175.
• Needham has a buy rating and a target of $175.

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