Evercore ISI analyst Adam Frisch has upgraded Block (XYZ, Financial), raising the rating from In Line to Outperform and increasing the price target to $75 from $58, suggesting a potential 21% increase. Initially, Evercore had concerns that Block's Cash App might adopt a more aggressive lending strategy to compensate for weaker first-quarter results. However, insights from industry experts and further discussions with the company have alleviated these worries, providing a clearer picture of Block's approach to balancing growth and risk.
Evercore's findings indicate that consumer spending, particularly at the lower end, as well as deposit and unemployment rates, are stable. Additionally, Evercore notes that new product innovations at Square, which is part of Block, strengthen the prospects for development efficiency and growth. These developments paint a positive outlook for Block's future performance.
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 62.95% from the current price of $61.76. 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 46.16% from the current price of $61.76. 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.
