Wall Street Believes This Stock With a Bitcoin 'Upside Kicker' Is a Top Pick for 2025
Exploring the top picks of investment banks for 2025, one name caught my eye. Here's what I find particularly interesting.
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We have random market action on Thursday with breadth running more than 2 to 1 negative as small-cap stocks IWM are weak and the Magnificent Seven MAGS is trading flat. There isn't much speculative action, but Bitcoin-related names are seeing some interesting movement. I've been adding a little Cipher Mining CIFR due to some speculative investment happening in Riot Platforms RIOT.
I'm looking for new ideas and have been exploring some of the top picks of investment banks for 2025. One name that caught my eye is Block SQ, which is well known for its Square payment platform and the Cash App application.
Block owns a large amount of Bitcoin, and Jack Dorsey, the CEO, believes it may become a native currency on the internet. It is not a pure cryptocurrency play, but it does have a potential upside kicker should Bitcoin continue to trend higher.
Analysts at Bernstein raised the firm's price target on Block to $120 from $90 and named it its new best idea for 2025. One reason for the positive rating is the potential that it will be added to the S&P 500 at some point next year. The stock meets all the necessary criteria, and there is already speculation that it will gain entry.
In addition, the company is seeing "significant" EBITDA growth from continued efficiency gains, and there are likely to be fewer regulatory issues under a Trump Administration.
Block's valuation is attractive, with a trailing P/E of 32 and expected EPS growth of 94% in 2024 and 26% in 2025. Sixteen percent of its market capitalization is cash, and it is projected to generate $3.0 billion-$3.5 billion of cash flow through the end of 2025.
Other analyst firms, including William Blair and Deutsche Bank, have also named Block a top pick for 2025.
What I find particularly interesting about the name is the longer-term chart. The stock had a good run in 2024 and is short-term extended, but it has been in a trading range since mid-2022 and is now on the verge of breaking out. The $100 level is key resistant but should be solid support if it can obtain that level early in 2025.
I don't currently own any shares, but I'll be watching it for a potential entry.
At the the time of publication, Rev Shark was long CIFR.
