2 days ago
JPMorgan Sees 24% Upside as Block Stock (XYZ) Joins the SPX Index
Fintech company Block (XYZ) is trading higher today in the pre-market session following the news of its upcoming addition to the S&P 500 Index (SPX). JPMorgan analyst Tien-tsin Huang reacted to the news by raising his price target on the stock from $60 to $90 and reaffirming an Overweight rating. The new price target indicates a 24% upside from current levels.
Elevate Your Investing Strategy:
Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
Make smarter investment decisions with TipRanks' Smart Investor Picks, delivered to your inbox every week.
S&P 500 Inclusion Supports Bullish Outlook
Huang, a 4.5-rated analyst, believes Block's inclusion in the index is a clear positive for the stock. Now that Block will join the index on July 23, he expects index funds to buy over 54 million shares, which is more than seven times the stock's usual daily volume. This move should boost liquidity and lift the share price, he said.
The analyst also sees growing momentum in Block's business, helped by faster product rollouts and better marketing efforts.
In his view, the company deserves a higher valuation multiple. His $90 price target is based on a 5x multiple of Block's forward gross profit, which is still below the 7–9x range that many fintech peers trade at.
What's Next for Block Stock?
The company is expected to release its second-quarter results on August 7. Wall Street expects Block to report earnings per share (EPS) of $0.67, indicating a year-over-year decline of about 28%.
Meanwhile, analysts project Q2 revenues at $6.27 billion, according to the TipRanks Analyst Forecasts Page. The figure marks a year-over-year increase of about 1.8%.
Is Block Stock a Good Investment?
On TipRanks, XYZ stock has a Moderate Buy consensus rating based on 28 Buys, six Holds, and two Sells assigned in the last three months. The average XYZ stock price target of $71.29 indicates a 2.1% downside risk.
