Block Shares Fairly Valued, Analysts Say Stock 'Not For The Faint Of Heart'

Block XYZ analysts expect a 2025 that is second-half weighted for the company after fourth-quarter financial results and guidance.

The Block Analysts

Benchmark analyst Mark Palmer reiterated a Buy rating on Block with a price target of $99.
Citizens analyst Andrew Boone maintained a Market Perform rating with no price target.
Raymond James analyst John Davis maintained an Outperform rating and lowered the price target from $115 to $103.
RBC Capital analyst Daniel Perlin maintained an Outperform rating with a price target of $110.
Keefe, Bruyette & Woods analyst Vasundhara Govil maintained a Market Perform rating and lowered the price target from $100 to $87.

Benchmark: Block reported encouraging takeaways in its quarterly results, Palmer said in a new investor note.

"The market's initial verdict on the 4Q24 report that Block (XYZ) released yesterday after the market close was unfavorable, as indicated by the decline in its share price," Palmer said.

The analyst said a miss on earnings per share and soft guidance likely caused the selloff, but the move may have been overdone.

Block reported gross payment volume and adjusted EBITDA ahead of estimates. It also faces a tough comp for first-quarter gross profit growth, the analyst added.

"They emphasized that they expected its gross profit growth to accelerate throughout the year while pointing to the drivers that would enable that pickup in momentum."

The company's planned expansion of the Cash App Borrow feature and the scaling of Afterpay on Cash App Card could help with momentum, Palmer noted.

Palmer said the company's efforts to grow its Square and Cash App segment should "begin to materialize in earnest" in 2025.

"As XYZ executes on its plans over the course of the year, we expect its shares to rise in response to that traction."

Citizens: Block's guidance includes more marketing investments and a potential loaded second half of the fiscal year, Boone said in a new investor note.

Boone said the product catalysts of Afterpay on the Cash App Card and Borrow could monetize the company's user base, but come with a more challenging and expensive environment for user and merchant growth going forward.

"We believe the company has multiple levers to continue to monetize its existing user base, but with guidance back-end loaded, implying 2025 is more of an investment year than we had anticipated," Boone said.

The analyst said the company is "leaning into marketing" to grow banking capabilities awareness.

"We see shares as fairly valued and await greater confidence in the upside potential before becoming more positive."

Raymond James: Quarterly results, which included mixed results, proved that Block is "not for the faint of heart," Davis said.

"While admittedly not the cleanest quarter, the bigger picture is that the Seller GPV ramp remains on track," Davis said.

The analyst said Block has a favorable risk/reward going forward based on gross payment volume growth and financial multiples.

"Encouragingly, Cash App card monthly actives increased 1M sequentially to 25M, which was the first q/q improvement since 1Q24."

RBC Capital: Product innovation will be a key for Block in fiscal 2025, Perlin said in a new investor note.

"While Block delivered mixed results and a slightly underwhelming guide, we believe the company is delivering product innovation," Perlin said.

The analyst said the new Afterpay-enabled Cash App Card could improve gross margins. The company's heavy investments in Square could lead to market share wins.

"These factors, among others, give us confidence in management's cadence for gross profit growth accelerating through the year."

Keefe, Bruyette & Woods: Block's 2025 financials and growth will likely be second-half loaded, Govil said in a new investor note.

Govil said the acceleration in the second half of the fiscal year may be different than what the market expected.

"Block anticipates gross profit growth to ramp up throughout 2025, with 1Q being the low point due to FX headwinds and leap-year comparisons," Govil said.

The analyst said the acceleration in the second half will be driven by product launches and increased marketing efforts. She also highlighted items like AI automation, Bitcoin mining infrastructure and expanding the sales team.

Price Action: Block stock is down 17.2% to $68.74 on Friday versus a 52-week trading range of $55.00 to $99.26.

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