Cathie Wood bought block stock. It also gets more of Wall Street’s attention.
Cathie Wood’s ARK Investment Management just bought a whole bunch of Block shares — and she’s not the only one getting more bullish on the fintech group, which has seen a lot more optimism from Wall Street analysts in recent weeks.
ARK’s flagship,
ARK Innovation ETF
(ticker: ARKK), bought about 104,500 shares of Block (SQ), according to an update Wednesday from the fund manager’s trading desk. It is
ARK Next Generation Internet ETF
(ARKW) also picked up more than 17,100 shares while
ARK Fintech Innovation ETF
(ARKF) bought less than 1,000 shares. Together, the purchases represent a position in Block worth about $9.1 million, based on the stock’s closing price of $74.07 on Wednesday.
The fintech group founded by former Twitter CEO Jack Dorsey has also received a lot of positive attention from analysts recently. The latest boost came from analysts led by Dan Dolev at Mizuho Securities, who upgraded the stock to Buy from Neutral and raised their price target to $93 from $80.
Block’s operations include Cash App, a mobile payment platform, as well as the Square point of sale and the “buy now, play later” service Afterpay.
“We downgraded Block to neutral in September on the assumption of stagnant Cash App inflows per user, increasing mix of higher risk lending and increasing competitive pressure in merchant acquisitions,” Dolev’s team wrote in a note Thursday.
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While Mizuho said concerns about revenue sustainability at Cash App remain, analysts “applaud management’s recent commitment to cost containment.” Dorsey detailed a new investment framework aimed at financial discipline from the company after its most recent earnings call in February, which analysts largely cheered.
Mizuho now sees 30% upside to the company’s 2023 earnings guidance, with significant potential for further margin growth.
“Additionally, Block remains uniquely positioned to achieve the ‘holy grail’ of creating a one-stop-shop network by connecting the point-of-sale, Cash App and BNPL ecosystems,” the analysts said.
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Mizuho is not an outlier. A wave of analysts raised their price targets on Block last month after the new investment framework was revealed, and that momentum has continued into March. Six analysts surveyed by FactSet have raised their price target on the stock since March 1, with two upgrading Block to Buy.
The block share rose 1.7% in pre-market trading on Thursday. Futures tracks
S&P 500
the index decreased by 0.4 per cent.
Write to Jack Denton at [email protected]
