Marqeta Inc. recently saw its stock dive 3% on Monday following a downgrade from Morgan Stanley, citing a mixture of headwinds and a “meaningful amount of uncertainty”. Analyst James Faucette noted that the company’s balance-sheet strength limits the stock’s downside.

The uncertainty lies in Marqeta’s deal renewal with Block Inc., the major customer that powers the company’s Cash Card service. Faucette noted that Block has disproportionate bargaining power and executives may ask for too much, yet may ultimately not want to harm Marqeta by doing so.

In addition, the analyst is also concerned by churn within key customer verticals especially with the current macro backdrop. Non-Block areas are significantly more profitable than Block, making a return to growth in these areas important to becoming more constructive on the stock.

Faucette downgraded Marqeta’s stock to equal-weight from overweight and set a price target of $4.50, which is lower than the original price of $8. In contrast, Wolfe Research’s analyst Darrin Peller was more positive and upgraded Marqeta’s stock to outperform from peer perform.

Marqeta is a fintech company providing advanced payment technology to companies across various industries. The company provides virtual cards, APIs and other financial services such as merchant authentication, fraud analysis, and dispute processing. Marqeta also allows customers to issue and manage their own digital payment cards, such as debit and pre-paid cards.

James Faucette is a US-based equity analyst with Morgan Stanley. He covers the technology, media and telecom space. Prior to his current role, he also spent 5 years at Credit Suisse and 7 years at Pacific Crest Securities where he held various roles as an analyst. He is a CFA Charterholder and earned a BS degree in Mechanical Engineering from Santa Clara University.