Block downgraded to Hold from Buy at Benchmark

Benchmark downgraded Block (XYZ) to Hold from Buy and removed the firm’ prior price target While Block has positioned itself for stronger profitability during the past several quarters by reducing expenses, trimming headcount, and consolidating operating units, the operating leverage it created would still require a solid top line to have the impact that management was seeking, the analyst tells investors. However, Block reported that Cash App inflows were weaker than expected and users’ spending had been tepid toward the end of February and during March, the analyst noted. The firm finds stagnation in the number of active users of the app “even more concerning” than users’ reduced spending and while management’s initiatives may help to reignite Block’s gross profit growth later this year, the firm is “not sufficiently confident in the likelihood of such a rebound to recommend buying the stock on weakness,” the analyst tells investors.