Hi Paul,
We share much of your enthusiasm for Block (ASX: XYZ), which offers diversified exposure to several of the most attractive areas of financial technology:
- Its Square platform provides payment terminals and financial services to merchants, while Cash App has developed into a broader financial ecosystem offering payments, banking-style services and access to Bitcoin.
- Block also owns Afterpay, providing exposure to the buy-now-pay-later (BNPL) market.
Importantly, these businesses complement one another, creating opportunities to attract customers, increase transaction volumes and expand the range of financial products offered. This dual listed stock was trading up more than 18% YTD on Wednesday in a market where the strong are getting stronger.
The latest Q3 2026 result reinforces our positive view:
- Revenue of US$6.72bn exceeded expectations, while gross profit surged 22% to US$3.2bn.
- Adjusted earnings per share of US$1.13–1.19 comfortably beat forecasts, marking the company’s sixth consecutive quarterly earnings beat.
- Management also upgraded its full-year gross profit outlook to US$12.6bn and guided to Q4 earnings of US$1.15 per share.
AI-driven efficiencies also help reduce costs and improve margins, suggesting earnings can grow faster than revenue as the business scales.
The combination of accelerating earnings, improving operating leverage and multiple growth opportunities adds weight our positive stance, as does its ~20x valuation considering EPS is forecast to kick more than 30% for FY27. Plus, as it’s also listed on the NASDAQ, it’s not at the mercy of lacklustre ASX sentiment towards growth tech stocks.
- MM is bullish towards XYZ around $117, targeting the $145–150 area, around 25% higher.
