BMO Capital Markets upgraded fintech stock Block after a pullback in share price this year. Block, formerly known as Square, has seen its shares fall 25.8% in 2022 and more than 50% off their August highs. "We view this as a rare GARP opportunity, given SQ's typical premium," wrote BMO's James Fotheringham, referencing "growth at a reasonable price." BMO on Sunday changed its rating on Block to outperform from market perform. The firm' price target of $159 implies 32.7% upside. The call comes after the payments giant reported better-than-expected earnings for its latest quarter and issued upbeat guidance for the current quarter and the full year. Block in particular highlighted growing success in its consumer business, Cash App. "We forecast a softer landing for Cash App (faster user growth and broader product monetization) and higher Afterpay accretion to revenue growth (+2%) and earnings (+4%)," Fotheringham said. BMO believes Block's investor day on May 18 could be the next positive catalyst for the stock. "We look forward to guidance regarding synergies expected from SQ's recently-completed acquisition of Afterpay, and the benefits of connecting SQ's merchant-facing Square business to its consumer-facing Cash App business via BNPL," Fotheringham said. "We also look forward to long-term financial goals for each of SQ's business units: Cash App, Square, TIDAL, and TBD." Shares of Block dipped roughly 3% in the premarket Monday. —CNBC's Michael Bloom contributed reporting.
The logos of Afterpay and Square.
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BMO Capital Markets upgraded fintech stock Block after a pullback in share price this year.