Payments fintech Block climbs after strong earnings forecast
10:56 am Friday, February 23rd, 2024
(Reuters) -Shares of Jack Dorsey-led Block jumped nearly 20% in early trading on Friday following premarket gains as cost cuts helped the payments firm forecast first-quarter core earnings above Wall Street expectations.
The stock was trading at $81.39, adding more than $8 billion to the company’s market value.
Block has been looking to lower costs and drive “profitable growth” in the business by trimming headcount and reducing its real estate footprint. The company said on Thursday it plans to cut 112 jobs in March.
“Strong execution and urgency in cost optimization are appreciated, while messaging continues to center on more focused, profitable growth,” brokerage TD Cowen said on Friday.
Block forecast adjusted core earnings between $570 million and $590 million for the first quarter on Thursday, compared to analysts’ estimates of $511.8 million, according to LSEG data.
The company also raised its full-year profit outlook by more than $200 million, forecasting 2024 earnings of at least $2.63 billion, or at least 15% growth from the previous year.
At least six brokerages raised their price targets on Block’s shares. More than 75% of the brokerages covering the stock have a “buy” or higher rating.
Block is trading at a forward price-to-earnings ratio of 21, compared with larger rival PayPal’s 11.34.
(Reporting by Mehnaz Yasmin in Bengaluru; Editing by Shounak Dasgupta)
