Square-parent Block faces slowing growth for its consumer Cash App in 2024, says a UBS analyst who downgraded SQ stock on Wednesday. Square stock has underperformed in 2023, dipping nearly 6% versus the Nasdaq's 34% gain.
UBS analyst Rayna Kumar downgraded Block stock to neutral from buy. She slashed her price target to 65 from 102.
"In the second half of 2023 and 2024, Block gross profit growth will likely slow given softening of consumer discretionary spending, a slowdown in Cash App monthly active user growth and moderation of Cash App monetization rates," she said in a note to clients.
On the stock market today, SQ stock dropped 1.9% to close at 57.64.
SQ Stock: What Cash App Does
Square stock operates a two-sided digital payments ecosystem, with products designed for both merchant sellers and consumer buyers.
The Square Cash App helps individuals manage money, buy stocks and cryptocurrency, and more. Block aims to bridge the Cash App and merchant ecosystems with consumer financing services from Afterpay, acquired last year.
"With a lack of catalysts in sight, and re-acceleration of gross profit growth unlikely, we see limited upside potential," Kumar said. "For 2024, Cash App gross profit growth could slow to 19% from 33% in 2023."
Square Stock Technical Ratings
Square's Relative Strength Rating stands at 23 out of a best-possible 99, according to IBD Stock Checkup. The best stocks tend to have an 80 or better RS Rating.
SQ stock, meanwhile, has an Accumulation/Distribution Rating of D-plus. The rating runs from a best-possible A+ to a worst-possible E. The rating analyzes price and volume changes in a stock over the past 13 weeks of trading.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
