SQ's downgrade today has the stock trading at an interesting level
Fintech stock Block Inc (NYSE:SQ) is 1.8% lower to trade $78.19 this morning, after Morgan Stanley issued a downgrade to "underweight" from "equal weight," along with a price-target cut to $60 from $62. The analyst in coverage cited "high market penetration and limited additional opportunity."
On the charts, the stock's 40-day moving average that was pressure for the first two months of the year is getting tested today. The shares have shed nearly 9% over the last week and are now just below their year-to-date breakeven mark, despite hitting a 12-month high of $87.52 on March 13.
The majority of analysts are bullish on SQ, no surprise given the 21% gain in the last months and doubling up the three-year Oct. 30 lows of $38.85. But should the recent consolidation continue into earnings season, it wouldn't be a surprise to see analysts downshift with price-target cuts. The equity's 12-month average target price of $89.39 is a more than 15% premium to its current perch.
Options are affordably priced right now, according to SQ's Schaeffer's Volatility Index (SVI) of 45% that ranks higher than 19% of readings from the past 12 month. This implies low volatility expectations are being priced in, while the stock's Schaeffer's Volatility Scorecard (SVS) of 97 out of 100 means it tends to exceed traders' volatility expectations.