Berenberg upgrades Marqeta to Buy with Block overhang removed

Berenberg analyst Mark Palmer upgraded Marqeta (MQ) to Buy from Hold with a price target of $8, up from $5, after the company announced a four-year extension of its contract with Block (SQ) to power its Cash App card product. While Marqeta’s near-term operating performance will reflect the economics of the Cash App renewal, which were “predictably” much reduced from what they had been in the prior deal given Block’s strong bargaining position, the company will now be able to establish a new baseline from which to grow during the next few years so the deal removes “a significant overhang on the stock,” the analyst tells investors.