Block
Over the past 12 months, Block Inc. (NYSE: SQ) has seen its share price fall by nearly 27%. Since posting a 52-week high late last March, the stock has dropped by about 51%, including a 33% bounce following a 52-week low in early November.
Payment processing rivals PayPal and Affirm already have reported results, with only PayPal beating expectations. Block is expected to report results more like PayPal’s than Affirm’s. Also worth noting is that a handful of shareholder lawsuits related to Block’s $23 billion acquisition of Afterpay have been filed recently and more are likely to follow.
Analysts remain mostly bullish on the shares, with 32 of 45 brokerages having a Buy or Strong Buy rating. Another nine rate the stock at Hold. At a recent price of $72.00 a share, the upside potential based on a median price target of $90.00 is 25%. At the high price of $150.00, the upside potential is 108.3%.
Fourth-quarter revenue is forecast at $4.59 billion, which would be up 1.6% sequentially and by 12.5% year over year. Adjusted EPS are expected to come in at $0.30, down 29% sequentially but up 11.1% year over year. For the full 2022 fiscal year, estimates call for EPS of $1.12, down 34.5%, on sales of $17.46 billion, down 1.1%.
Block’s shares trade at about 64.2 times expected 2022 EPS, 40.7 times estimated 2023 earnings of $1.77 and 28.5 times estimated 2024 earnings of $2.52 per share. The stock’s 52-week trading range is $51.31 to $149.00. Block does not pay a dividend. The total shareholder return for the past year was negative 26.37%.
Carvana
Following a near-death experience in early December, used car retailer Carvana Co. (NYSE: CVNA) was revived in late January in what looks like nothing so much as a short squeeze. At the end of the previous quarter, Carvana stock had lost 95% of its value over the preceding 12 months. The 12-month loss three months later remains at 92%. The power of the short squeeze is limited after all. Even the fact that George Soros acquired some shares had no major impact on the share price.
Analysts are neither excited nor demoralized by the stock price. Of 26 brokerages covering Carvana, 21 have a Hold rating and three have a Buy or Strong Buy rating. At a price of around $10.00 a share, the stock trades right at its median price target. At the high price of $22.00, the upside potential is 120%.
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