Truist Securities has begun coverage on Block (XYZ, Financial) with a Sell rating and set a price target of $60. While the firm appreciates Block's long-term potential, it views the stock as challenging to hold in the current market cycle. This is due to the macroeconomic sensitivity of Block's two main business segments.
Block is pushing for growth in its lending products, aiming to revitalize expansion by 2025. However, this strategy could lead to increased credit losses, complicating the company's growth trajectory into 2026. Consequently, Truist anticipates that Block's shares may not perform as well as those of its competitors.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 40 analysts, the average target price for Block Inc (XYZ, Financial) is $100.64 with a high estimate of $125.00 and a low estimate of $57.00. The average target implies an upside of 62.97% from the current price of $61.75. More detailed estimate data can be found on the Block Inc (XYZ) Forecast page.
Based on the consensus recommendation from 45 brokerage firms, Block Inc's (XYZ, Financial) average brokerage recommendation is currently 2.0, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Block Inc (XYZ, Financial) in one year is $90.27, suggesting a upside of 46.19% from the current price of $61.75. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Block Inc (XYZ) Summary page.
XYZ Key Business Developments
Release Date: May 01, 2025
- Total Block Gross Profit: $2.29 billion, up 9% year-over-year.
- Square Gross Profit Growth: 9% year-over-year, driven by GPV growth of 7.2%.
- Cash App Gross Profit: Up 10% year-over-year.
- Gross Profit Per Monthly Transacting Active: $81 in the quarter.
- Adjusted EBITDA: $813 million, up 15% year-over-year.
- Adjusted Operating Income: $466 million, up 28% year-over-year.
- Adjusted Free Cash Flow: $1.53 billion for the trailing 12 months ending in March.
- Stock Repurchase: Approximately $600 million repurchased through the end of April.
- 2025 Gross Profit Growth Expectation: 12% or $9.96 billion.
- Second Quarter Gross Profit Growth Expectation: 9.5%.
- April Global GPV Growth Expectation: 9.6% year-over-year.
- Adjusted Operating Income Expectation for 2025: $1.9 billion or approximately 19% margin.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Block Inc (XYZ, Financial) reported a total gross profit of $2.29 billion for the first quarter, marking a 9% year-over-year increase.
- Square demonstrated strong performance with a 9% year-over-year gross profit growth, driven by a 7.2% GPV growth.
- The company achieved its highest adjusted operating income and adjusted EBITDA ever, with adjusted EBITDA up 15% year-over-year.
- Block Inc (XYZ) received FDIC approval to use Square Financial Services for issuing consumer loans, which is expected to significantly enhance unit economics and expand the Cash App Borrow offering.
- The company is actively investing in AI and product innovation, with plans to showcase over 100 new products and features, which are expected to drive future growth.
Negative Points
- Cash App's gross profit came in below expectations, attributed to changes in consumer spending behavior, particularly during the tax refund season.
- The company has embedded a more cautious macroeconomic outlook into its guidance, reflecting potential softening in consumer spending.
- Despite strong performance in Square, Cash App's growth was impacted by lower-than-expected inflows and discretionary spending.
- Block Inc (XYZ) lowered its full-year adjusted operating income guidance, reflecting a more conservative approach due to macroeconomic uncertainties.
- The company did not provide specific numbers for Cash App's direct deposit users, indicating potential challenges in expanding this user base.
