Block (NYSE:SQ) declined in trading after top-rated Morgan Stanley analyst, James Faucette, downgraded SQ to a Sell from a Hold and lowered the price target to $60, from $62. The analyst’s current price target implies a downside potential of 22.6% at current levels.
Faucette downgraded the stock because a demographic analysis of users suggests limited potential for expanding banking and credit services through Block’s Cash App. It has achieved a high market penetration.
Additionally, the analyst remained concerned about Square Seller’s growth due to limited same-store sales expansion and pandemic-related merchant closures. The increased competition and rival point-of-sale providers offering new products with additional features also contributed to the concerns.
Square’s offering for sellers accepts and manages online and in-store orders for direct-to-consumer (D2C) brands.
What is the Forecast for SQ Stock?
Analysts remain bullish about SQ stock, with a Strong Buy consensus rating based on 26 Buys and four Holds. Over the past year, SQ has increased by more than 10%, and the average SQ price target of $90.42 implies an upside potential of 16.5% at current levels.
