Here’s what Wall Street experts are saying about Block ahead of earnings

Block (SQ) is scheduled to report results of its second fiscal quarter after the market close on August 3, with a conference call scheduled for 5:00 pm EDT. What to watch for:

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TARGET RAISE AHEAD OF EARNINGS: Late last month, Jefferies raised the firm’s price target on Block to $90 from $80, while keeping a Buy rating on the shares. The firm likes the Q2 setup based on its expectation for 2-3 points of upside to the outlook for gross profit growth, driven by Cash App growth and Seller GPV growth that is accelerating relative to Visa (V) and MasterCard (MA) U.S. volumes. Jefferies also expects “a more aggressive raise” to the fiscal year adjusted EBITDA outlook than in Q1.

Truist also raised the firm’s price target on Block to $90 from $80 with a Buy rating on the shares. The firm recognizes that Square segment volume and organic revenue growth likely need to reaccelerate for the stock to durably re-rate higher, but is more bullish than many on Cash App’s terminal value, as it sees it emerging as a legitimate Legacy FI debit card substitute with ample interchange monetization potential.

Meanwhile, KeyBanc raised the firm’s price target on Block to $85 from $75 and maintained an Overweight rating on the shares. The firm cited survey results indicating solid core POS trends and strong representation in front-office capabilities, including CRM and email marketing that may drive continued adoption from SMBs in the wake of ongoing vendor consolidation. That said, KeyBanc still reserves caution around the macro-related softness, particularly as it relates to discretionary spend.

OUTLOOK: During the company’s last earnings call, Block said it saw full year 2023 adjusted EBITEA at $1.36B versus its previous view of $1.3B. The company also said it saw full year 2023 adjusted operating income loss ($115M) versus its previous view of ($150M).