Block Sees Strong Growth in Q4 2022

Narrow-moat Block continued to show its ability to generate strong top-line growth in the fourth quarter, but historically the company has struggled to turn this growth into better profitability. Results this quarter and management’s guidance for 2023 suggest that this will remain the case in the near term, although management outlined a framework to assess and improve long-term profitability on its call. We will maintain our $104 fair value estimate. We believe shares are undervalued but would stress our Morningstar Very High Uncertainty Rating.