S&P/ASX 200 Index (ASX: XJO) stock Block Inc (ASX: SQ2) looks set to finish 2024 with some strong annual outperformance.
Shares in the global buy now, pay later (BNPL) company, which acquired Afterpay in January 2022, closed yesterday trading for $141.83. In morning trade on Friday, shares are swapping hands for $141.22 apiece, down 0.4%.
For some context, the ASX 200 is down 0.7% at this same time.
Despite slipping 6.0% since Wednesday's close amid concerns of fewer interest rate cuts in 2025 from the US Federal Reserve, the Block share price remains up 24.1% year to date. That's almost four times the 6.3% gains posted by the benchmark index in 2024.
And according to Wilson Asset Management portfolio manager Tobias Yao, 2025 could see the ASX 200 stock continue to amply reward shareholders.
ASX 200 stock tipped to outperform guidance
"Block Inc offers a suite of financial services and products including Square which assists businesses in processing transactions and to achieve their growth aspirations," said Yao.
Commenting on the strong financial metrics the ASX 200 stock reported for the September quarter, Yao said:
During the month, Block Inc announced its September 2024 quarter results, noting growth in gross profit by 19% year-on-year to US$2.25 billion.
The company's profitability improved during the quarter, delivering adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) of US$807 million, up 69% year-on-year, which beat market expectations.
Block released those results on 8 November. Although shares rather inexplicably closed down 6.1% on the day, the Block share price has since soared 26%.
And Yao believes the ASX 200 stock could benefit from several forceful tailwinds in 2025.
"We continue to expect Block to outperform its initial gross profit guidance for 2024 with a strong outlook for 2025 and also see a chance that the company enters the S&P 500 Index (SP: .INX) in the United States," he said.
What full year guidance did Block give?
At its third quarter results, Block forecast 2024 gross profit of $8.89 billion, representing growth of 18% from 2023.
And the company upped its earnings forecast.
The ASX 200 stock boosted its EBITDA guidance for 2024 to $3.0 billion, up from the prior $2.9 billion expectations. If Block delivers on this guidance, that will represent a 34% year on year increase in earnings.
And management has a bullish outlook for 2025.
Block is forecasting its gross profits next year will grow by at least 15% from 2024 levels.
