Block Inc. (NYSE:SQ) has seen its fair share of adversity in recent months. Generally, SQ stock has been trending downward steadily over recent months. But a recent announcement out of the Apple (NASDAQ:AAPL) camp is challenging Block’s fintech offerings and even its status as the de facto crypto pioneer. Luckily, the stock is getting thrown a lifeline thanks to a bank’s new report.
Block — formerly Square, Inc. — carved out a name for itself as a fintech leader in recent years by offering products made for everybody. Its flagship service, Cash App, is the main challenger to PayPal’s (NASDAQ:PYPL) Venmo platform thanks in large part to the fact that you can make an account without needing to link banking information. Its product suite is also accommodating to small businesses by driving seamless point-of-sale through smart phones and tablets.
But it hasn’t been easy for SQ stock in 2022. The first quarter of the year so far continues where it left off in Q4 of 2021: in a steady decline. Since August of last year, the stock has been shaving off value; ultimately, it has dropped over $170 — a decrease of 60%.
To add insult to injury, the company is also seeing its model challenged by tech giant Apple. Earlier this week, Apple announced it would be adding contactless payments through its tap-to-pay service for iPhones. For Block to see this news in the midst of its downward slide makes for an even more bearish picture; Apple’s incoming feature will directly challenge Block’s technology. Moreover, it seems that the service will even allow users to trade cryptocurrency, challenging Block’s recent pivot toward more blockchain-oriented projects.
SQ Stock Turns Around on BofA Upgrade
While SQ stock might seem down and out as a result of this news, that’s not the case. Block could be mounting a comeback, and it could very well be starting today, thanks to Bank of America (NYSE:BAC).
In a new report by Bank of America this morning, analysts are upgrading SQ stock’s rating to buy. Specifically, the company asserts that Block’s Cash App business is particularly undervalued. “Once management provides some clarity on forward-looking Cash App expectations … we believe the Street would recalibrate its view on SQ’s valuation,” reads the new report.
The report upgrades SQ stock to buy from its previous neutral rating, and sets a price target of $185 for the stock, which opened today at about $108. As investors digest this bullish news this morning, though, the stock is seeing some immediate upward momentum. Shares are gaining about 8%.
On the date of publication, Brenden Rearick did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
