Bernstein says this tech stock is its best idea for 2025, could be added to the S&P 500
Payments processing company Block is one of Bernstein’s favorite stocks heading into 2025. Analyst Harshita Rawat, who holds an outperform rating on the stock, raised her price target on shares to $120 from $90. The new price target implies shares surging 35% from Friday’s close. Block is the parent company to Square, a point-of-sale system. It also owns digital wallet company Cash App and buy-now-pay-later company Afterpay. The latter two segments have come under regulatory scrutiny recently, but stand to benefit from a more lax regulatory environment next year, per Rawat. Square’s gross payment value could jump from 2% to 3% in 2025, according to Rawat. She also estimates the company’s EBITDA growth hitting 30% amid increased efficiency. “Looking into 2025, we see potential for mid-teens gross profit growth driven by incentives around increasing direct deposit penetration (the #1 driver of long-term growth), growth in borrow and commerce initiatives (e.g., Cash App and Afterpay on Cash App Card). The stock also has the potential for inclusion in the broad market S & P 500 index, she added. “Although it is hard to bake in a timing, we believe SQ now checks all the boxes for S & P inclusion,” Rawat said. Shares of Block are up 21.2% in 2025, slightly lagging behind the broader market’s rise. The stock jumped more than 5% on Monday. —CNBC’s Michael Bloom contributed to this report.