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11/28/2023 1:47:43 PM Eastern Time

Different Approach
By Karina Hernandez, Senior Research Analyst

 Click here to download PDF version

This morning, two Federal Reserve governors gave different approaches about getting inflation down in speeches which reflected the division in the central banks.

Fed’s Bowman said she still expects the Fed to raise further to bring inflation down “to our 2% target in a timely way.”

But Fed’s Waller said he is becoming more confident the Fed is done raising interest rates. He said, "I am increasingly confident that policy is currently well positioned to slow the economy and get inflation back to 2%." 

Waller’s comments proved to be a positive catalyst to sentiment and the indices reversed higher.

Nine sectors are displaying gains this afternoon with Energy holding the lead. WTI is up 2.75% today to $76.91, ahead of the OPEC + producers online ministerial meeting Thursday to discuss the 2024 production targets.

On the economic front, November’s Consumer Confidence came in at 102 vs. consensus of 101. However, the results from last month were revised downward to the lowest level since 2021.

 

Long Idea: Block, Inc. (SQ) @ $63.29
Industry: Financials; Payment Services
Click here to view the trading alerts that followed this recommendation

Trading Parameters
Status Closed
Entry Price$63.29
Entry Limitsee comments
Stop LossN/A
Target$75.00


Long Option Trade Parameters
Status Closed
Type Call
Option Symbol SQ240419C00065000
Entry Price $7.10
Strike Price $65.00
Expiration Date 4/19/2024
  Add to Position Tracker

BACKGROUND: Block, Inc., together with its subsidiaries, creates tools that enables sellers to accept card payments and provides reporting and analytics, and next-day settlement. The company provides hardware products, including Square Register that combines its hardware, point-of-sale software, and payments technology; Square Terminal, a payments device and receipt printer to replace traditional keypad terminals, which accepts tap, dip, and swipe payments; Square Stand, which enables an iPad to be used as a payment terminal or full point of sale solution; Square Reader for contactless and chip that accepts EMV chip cards and NFC payments, enabling acceptance through Apple Pay, Google Pay, and other mobile wallets; and Square Reader for magstripe, which enables swiped transactions of magnetic-stripe cards by connecting with an iOS or Android smartphone or tablet through the headphone jack or Lightning connector. It also offers various commerce products, including Square for Restaurants; Square Appointments; Square for Retail; Square Point of Sale; Square Online; Square Online Checkout; Square Invoices; Square Virtual Terminal; Risk Manager; Order Manager; Payment application programming interfaces (APIs); and Commerce APIs. In addition, the company provides Cash App, an ecosystem of financial products and services that enables customers to store, send, receive, spend, or invest their money. It serves in the United States, Canada, Japan, Australia, New Zealand, the United Kingdom, Ireland

SKINNY: SQ and Afterpay sellers hit record-breaking black Friday and Cyber Monday with 70M transactions. The stock trades at a very reasonable valuation and has a lot of future growth potential. Our target is $76.


Key Fundamentals
PEG  1.70
Book Value  29.07
Institutional Holdings  72.46
Price/Sales  2.11
Average Daily Volume  12.97M
Shares Outstanding  553.57M
Market Value  38.77B
Insider Activity  28 Buys 25 Sales
52-week High  89.97
52-week Low  38.85
Annual Earnings Estimate  3.08

Analyst Coverage
 Daiwa Securities Upgrade  Buy
 CLSA Upgraded  Outperform
 Wells Fargo Initiated  Equal Weight



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