Block shares are poised to move considerably higher after the company optimizes operations to pump up its profits, according to Piper Sandler. The investment firm double upgraded the payments name to overweight from underweight. It also hiked its price target on shares to $100 from $58, suggesting 27% upside from Monday's close. Shares rose nearly 1% premarket. "Valuation compression has created selective opportunity," analyst Bill Carcache said Monday in a note to clients. "We view Block as a gross profit growth and margin expansion story whose current valuation does not fully reflect the durability of its earnings trajectory." The analyst added that "double-digit growth remains achievable without aggressive assumptions," largely due to Square and CashApp's moves to better monetize their businesses. More broadly, Block has exhibited more expense discipline and is also poised to benefit from emerging artificial intelligence-driven efficiencies, enabling gross profit increases to turn into faster adjusted operating income growth, Carcache noted. Those gains, in turn, should drive up Block stock, according to Piper Sandler. Shares of the Jack Dorsey-founded company have risen nearly 15% over the past year, boosted by an improved financial outlook and moves to lower operational costs. The stock, for example, got a double-digit boost immediately after halving its headcount in late February . Piper Sandler's call falls in line with consensus on Wall Street. Of the 44 analysts covering Block, 38 have a buy or strong buy on the stock, LSEG data shows.
<small>Source: CNBC</small>
