Block upgraded to Outperform from In Line at Evercore ISI

Evercore ISI analyst Adam Frisch upgraded Block (XYZ) to Outperform from In Line with a price target of $75, up from $58, implying 21% upside. The firm says Cash App lending will not be as aggressive as it thought coming out of the company’s Q1 earnings. Evercore was worried that more aggressive lending to new consumers in new states with higher limits would be used to offset lower Q1 Cash App numbers, but feedback from industry contacts and multiple company follow-ups enabled a deeper understanding of Block’s growth and risk tolerance balance and made the firm “materially less concerned.” Further, Evercore’s checks point to relatively steady low-end consumer spending trends, deposit rates, and unemployment deposits. The firm also believes new product releases at Square bode well for future development efficiency and growth opportunities.