Analysts Just Revised Their Ratings for These 5 Stocks

3. Block, Inc. (NYSE:SQ)

Number of Hedge Fund Holders: 84

Macquarie downgraded Block, Inc. (NYSE:SQ) from “Outperform” to “Neutral” on Tuesday, July 19, 2022. Macquarie analyst Paul Golding thinks that the company’s operating costs would likely weigh on its adjusted EBITDA in the coming quarter. He also cut his price target for Block, Inc. (NYSE:SQ) from $140 per share to $64 per share.

Earlier this year, Block, Inc. (NYSE:SQ) appeared in the first-quarter 2022 investor letter of investment management firm Farrer Wealth Advisors. Here’s what the firm said:

“Block (formerly Square): We ‘adopted’ Block’s stock after the company bought Afterpay, which we were investors in. We had been trimming the Afterpay position throughout 2021 and trimmed again after the acquisition, so the position was quite small. We held onto that small portion, as we did think the acquisition made sense and were excited to see the two companies integrate and for Block to create a closed loop network between merchants and consumers. However, the market punished most highly valued tech stocks over the last months, and we saw the position move against us by over 50%. We are firm believers that when a stock goes against you by 50%+, you need to do something about it. Either trim/sell and reinvest or buy more. In the case of Block, the original reason for holding was to see how the acquisition and integration with Afterpay panned out. The market did not give us the time to see this play out, thus we were not comfortable adding more to the position. Further for the stock to recover to our purchase price, we felt the company’s valuation would need to command a future exit multiple that the market would be unlikely to pay in this environment. Given this, we exited the remainder of the position.”