Block Inc (XYZ) Stock Forecast & Price Target

Block demonstrates a strong financial outlook, with expectations for gross profit to grow by 17% year-over-year, reaching approximately USD 11.98 billion by FY26, alongside a projected 31% year-over-year increase in adjusted operating income to USD 2.70 billion. Incremental margins are anticipated to improve annually, indicating efficient scaling of operations, while the company’s Cash App Borrow product has successfully increased loan originations fivefold over the past two years, showcasing robust demand and profitability potential. Additionally, the anticipated increase in marketing spend and expansion of sales resources are set to drive significant growth in net revenue added (NVA) and reinforce the company's competitive position in the digital payments landscape.

Block's stock outlook appears negative due to a persistent stagnation in new volume added (NVA) between FY22 and FY24, reflecting significant execution challenges in its go-to-market strategy and an ineffective organizational structure. Additionally, the company faces heightened risks as its business model heavily relies on small and medium-sized businesses and underbanked consumers, making it particularly vulnerable to potential economic downturns and a slowdown in retail sales. Furthermore, even with a projected FY26 EV/gross profit of approximately 3.0x and an FY26 EV/EBITDA multiple of around 8.5x—well below the industry average of 20x—such metrics suggest that recovery may be constrained by past performance issues and a lack of strong consumer demand.