Block Rebound Could Lift Future of Finance ETF

Date:

CHOOSE YOUR CHOICE GIFT CARD OFFER TODAY


Shares of Block (NYSE:SQ), the fintech company formerly known as Square, shed more than a third of their value year-to-date, but some analysts say that this decline is a case of too much too soon and that the stock has rebound potential.

CHOOSE YOUR CHOICE GIFT CARD OFFER TODAY

Should the downtrodden stock bounce back, a rally could benefit an array of exchange traded funds, including the newly minted Grayscale Future of Finance ETF (GFOF). GFOF, which debuted on February 1, had a 6.69% allocation to Block entering today, making the stock the ETF’s fourth-largest holding.

Last Friday, Bank of America upgraded San Francisco-based Block to “buy” from “neutral,” noting that market participants aren’t assigning enough value to Cash App.

CHOOSE YOUR CHOICE GIFT CARD OFFER TODAY

“The market is not currently ascribing nearly enough value to the Cash App business, and once management provides some clarity on forward-looking Cash App expectations, which could happen as soon as the 4Q21 earnings call on February 24, we believe the Street would recalibrate its view on SQ’s valuation, ultimately driving outperformance in shares from current levels,” said Bank of America analyst Jason Kupferberg in a note to clients.

Kupferberg added that rising interest rates are one factor weighing on shares of Block, but that fear is likely overblown.

CHOOSE YOUR CHOICE GIFT CARD OFFER TODAY

“However, we believe the above concerns in aggregate have become over-discounted in shares,” said the analyst, adding that investors stepping into Block over the near term are “getting Cash App at a bargain.”

CHOOSE YOUR CHOICE GIFT CARD OFFER TODAY

The analyst said that his sum-of-the-parts valuation on Cash App is $6.5 billion, or more than 10% of Block’s closing market value of $57.8 billion last Friday. Additionally, there could be some near-term upside to be had when Block reports fourth-quarter results later this month.

“Once management provides some clarity on forward-looking Cash App expectations, which could happen as soon as the 4Q21 earnings call on Feb. 24, we believe the Street would recalibrate its view on SQ’s valuation, ultimately driving outperformance in shares from current levels,” added Kupferberg.

Kupferberg isn’t the only analyst that’s bullish on Block. Last Friday, Citigroup analyst Peter Christiansen resumed coverage of the marquee member of the GFOF lineup with a “buy” rating and a $220 price target. That’s more than double where the stock closed on February 11.

Should Block notch an earnest rebound, it could lift rival PayPal (NASDAQ:PYPL) in the process. That stock is GFOF’s fifth-largest holding at a weight of 6.41%.

CHOOSE YOUR CHOICE GIFT CARD OFFER TODAY

For more news, information, and strategy, visit the Crypto Channel.

Read more on ETFtrends.com.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



Source link

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Share post:

Subscribe

Popular

More like this
Related

Finding A Good website positioning Company

Well executed search engine optimisation, typically called web optimization...

Social Spy WhatsApp Terbaru Download dan Cara Menggunakan

Social Spy WhatsApp 2022 Terbaru – Pernahkah Anda berada...

Oscar De La Hoya released from hospital after battle with COVID

Antuan Goodwin/RoadshowThankfully, 먹튀검증 the Red Sport 400 has...