Block's Bullish Stance With Cost-Savvy Moves Spark Analysts' Confidence In 2026 'Rule Of 40' Goal

Shares of Block Inc SQ were spiking higher on Friday, following the company's third-quarter earnings report.

The results came amid an exciting earnings season. Here are some key analyst takeaways from the earnings release.

Canaccord Genuity On Block

Analyst Joseph Vafi reiterated a Buy rating, while reducing the price target from $90 to $80.

“Sometimes a challenging macro environment can be a catalyst for change,” Vafi said in a note.

“We came away from Block's Q3 results with a sense of urgency among the management team to reinvigorate the seller business, strengthen the connection between the ecosystems, and manage costs,” the analyst wrote. “Barring the impact on Square GPV, key metrics across the main business lines, especially Cash App, continue to be healthy,” he added.

Needham On Block

Analyst Mayank Tandon reaffirmed a Buy rating, while cutting the price target from $82 to $77.

Block reported mixed third-quarter results, with lower transaction revenues due to macro pressures being offset by better-than-expected margins to drive an earnings beat, Tandon said.

Management re-introduced formal guidance and projected mid-teens gross profit growth and a mid-20s adjusted operating income margin for 2026, the analyst stated. “We believe these healthy financial targets are achievable and strike a balance between growth and profitability,” he added.

Truist Securities On Block

Analyst Andrew Jeffrey maintained a Buy rating and price target of $70.

“We think SQ has put in cycle lows as the co formalizes guidance, Rule of 40 timing/path and puts C24E nearly 25% above consensus,” Jeffrey wrote in a note.

Although reaccelerating GPV growth will require significant effort, there seems to be “a renewed sense of urgency,” the analyst said. “It is our view that CashApp will continue impressive monetization, driving gp $ upside as Block pulls its two ecoystems closer, increasing monetization,” he added.

Check out other analyst stock ratings.

Goldman Sachs On Block

Analyst Michael Ng reiterated a Buy rating and price target of $95.

Block’s third-quarter gross profit of $1.9 billion was in line with the consensus estimates, “with Cash App and Seller gross profit individually in-line,” Ng said.

“We’re encouraged by SQ’s commitment to opex efficiency while maintaining strong gross profit growth, resulting in a better than expected outlook for 2024 and 2026, along with a $1 bn buyback authorization,” he added.

Raymond James On Block

Analyst John Davis reaffirmed a Market Perform rating on the stock.

Block reported solid third-quarter results, with “a significant adj EBITDA beat, driven by lower adj opex as gross profit dollars were largely in line,” Davis said in a note.

Although the consolidated gross profit guidance for the fourth quarter was below expectations, “adj EBITDA is ~12% above given cost controls,” the analyst stated. “More importantly, the initial FY24 adj EBITDA guide was better than expected, and SQ is expected to reach the rule of 40 mark in 2026 (mid-teens+ GP growth & mid-20% op margin),” he added.

Oppenheimer On Block

Analyst Dominick Gabriele maintained a Perform rating on the stock.

“SQ has previously discussed targeting a rule of 40 (YoY GP growth + operating income margin) except now they have set 2026 as the timeline to achieve this goal,” Gabriele wrote in a note.

“The combination of mid-teens GP outlook LT with rule of 40, suggests a ~25% adjusted operating income margin,” the analyst said. “This is achieved through growth and significant leverage on stock based comp as SQ cuts and halts their workforce to 12K from 13K and other efficiencies,” he added.

SQ Price Action: Shares of Block were up 13.44% to $49.89 at the time of publication Friday.

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