Block Inc (XYZ) Stock Forecast & Price Target

Block's optimistic outlook is supported by a projected 17% year-over-year gross profit growth, expected to reach $11.98 billion by FY26, along with a substantial 31% increase in adjusted operating income to $2.70 billion. The company has successfully scaled its Cash App Borrow product, achieving a fivefold increase in loan originations over two years, while also outlining aggressive plans for continued growth with stable loss rates. Additionally, Block aims to enhance synergies between its Square and Cash App platforms, leveraging partnerships and marketing strategies to sustain low-to-mid-teens CAGR over the next three years.

Block's stock faces a negative outlook primarily due to its current market positioning and operational challenges, as evidenced by a projected downside scenario with a price target of $53, which reflects a significant discount to expected gross profit estimates. The stagnation in new volume added from FY22 to FY24, coupled with a business model heavily reliant on small and medium-sized businesses (SMBs) and underbanked consumers, raises concerns about resilience during potential economic downturns. Furthermore, inefficiencies within the company's organizational structure and execution—highlighted by its lack of cohesive product strategy and innovation—contribute to skepticism regarding Block's ability to compete effectively in the evolving financial services landscape.