BofA analyst Jason Kupferberg notes that Block shares have declined 46% since the end of July, despite the fact that FY23 and FY24 sell-side estimates have increased modestly. The firm believes this “unjustified pullback” is due to factors that include a rotation out of growth stocks amid higher rates, crowded investor positioning, questions surrounding Square execution on new verticalized sales structure following a leadership change, worries about Cash App gross profit deceleration in Q3 and a recent platform outage that the firm says was “likely a one-off.” Ahead of the company’s Q3 report due on November 2, BofA says ongoing opex discipline could drive another raise in FY23 adjusted EBITDA guidance and the firm maintains a Buy rating and $71 price target on Block shares.
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