Surging 43% in October, Analysts Back This ASX Fintech Stock for the Long Term

2 min read | November 20, 2023 05:09 PM AEDT | By Team Kalkine Media

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Surging 43% in October, Analysts Back This ASX Fintech Stock for the Long Term — Image source: shutterstock

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Investing in ASX financial shares that have experienced a 52% decline since April last year might seem counterintuitive. However, several experts are confidently backing fintech Block Inc CDI (ASX:SQ2) as a long-term winner despite recent market adversity.

Mid-term growth will be structurally driven

While Block Inc (ASX SQ2) faced a more than 12% dip in October due to concerns about slowing growth in the Square segment after the retirement of Square CEO Alyssa Henry, analysts at ECP Growth Companies Fund remain steadfast in their support. They believe in Block's long-term potential, viewing short-term fluctuations as part of changing US consumer spend dynamics.

"Our investment thesis continues to look-through shorter-term accelerations/decelerations attributable to changing US consumer spend. We believe Square's mid-term growth will be structurally driven by its progress penetrating upmarket US and offshore merchants, while its other key segment — Cash App — is around the corner from rolling out its integrated commerce offering, presenting a new source of revenue growth for the company, pending its ability to execute," states ECP.

The recent 42.7% surge in the Block Inc stock price this month supports the analysts' optimism.

Excellent performance and outlook for the US fintech

Moomoo market strategist Jessica Amir highlights the positive impact of Block Inc's business update, emphasizing its robust third-quarter earnings report. The report revealed higher net revenue growth, increased earnings per share, improved earnings (EBITDA), and elevated transaction-based revenue. Block also upgraded its guidance, anticipating long-term growth.

Amir draws attention to the thriving business of Square, Block's payment terminal, particularly in the context of the current economic climate. Despite challenges, Block Inc remains resilient, attracting confidence from both analysts and investors.

With an upbeat outlook and recent impressive performance, Block Inc seems to be on a trajectory for success. Analysts at CMC Markets, all rating the fintech stock as a strong buy, further solidify the positive sentiment surrounding Block Inc's future prospects.

Investors contemplating Block Inc may find the current market conditions an opportune moment to consider long-term investment before potential future surges.

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