Block’s stock heads for best day in 15 months as it’s now appealing in a new way

The company’s “progress over the past several months in terms of streamlining itself organizationally, sharpening its focus within its two key businesses Square and Cash App, and becoming hyper-focused on driving profitable growth has been impressive — and we think there’s more to go,” wrote Seaport Research analyst Jeff Cantwell.

He turned bullish on Block’s stock after its Thursday afternoon earnings report, cheering management’s “excellence in execution” and the company’s “compelling” margin expansion. Block posted a 28% margin on adjusted earnings before interest, taxes, depreciation and amortization (Ebitda) — up 1,100 basis points from a year before.

“We think it’s very rare to see that level of operating leverage in the space right now, particularly in the current macro environment, and it’s the key reason which compels us to change our investment thesis on the company,” Cantwell wrote, as he lifted his price target on the stock to buy from neutral. He has a $95 target price on shares.

Benchmark Company analyst Mark Palmer lauded Block as “one of the most compelling stock stories” in fintech, in part due to his “expectation that management’s focus on controlling expense growth would have a dramatic impact on SQ’s profitability.”

Further, Palmer is upbeat about Block’s work to grow its Cash App mobile wallet and convince more users to try banking services within it.

He pointed to his ”belief that the Cash App’s ability to serve as a bank-account substitute for millions of unbanked and underbanked consumers, combined with management’s efforts to boost monetization through price increases, would drive the company’s top- and bottom-line growth.”

Palmer rates the stock at buy with an $89 target price.

Bernstein’s Harshita Rawat again commented that Block has started to mirror Meta in finding “religion” on operating expenses, helping to pull the name out of a “no-man’s land of not being growthy enough for growth investors or profitable enough for [those focused on growth at a reasonable price].”

Block posted a GAAP profit in its latest quarter, and shares are “now attractive on GAAP” metrics, according to Rawat, who noted that they trade at 20 times 2025 earnings per share.

And she found other reasons to cheer the company’s profit progress. “Interestingly, we find that Cash App is now likely at Square levels of profitability,” she wrote, referring to the Square merchant business. “Cash App’s growth now appears to be margin-accretive vs. margin drag historically.”

Rawat has an outperform rating on the stock, and she upped her target price to $90 from $85 in a Friday report.

Truist Securities analyst Andrew Jeffrey argued that Wall Street wasn’t giving the Cash App enough credit given what he deems to be a mistaken view that the Cash app is a peer-to-peer service focused on monetizing through instant deposits of payments to external accounts, rather than one that generates revenue through its internal banking offerings.

“By contrast, the company highlighted new solutions aimed at driving greater [direct deposits], hence more daily use,” he wrote.

Jeffrey boosted his price target to $100 from $90 late Thursday, while reiterating a buy rating.