Block shares hold buy rating, $115 target from TD Cowen

On Friday, TD Cowen maintained a positive stance on Block Inc. (NYSE: SQ) shares, as analyst Bryan C. Bergin reiterated a Buy rating with a $115.00 price target. According to InvestingPro data, Block, currently trading at $74.47 with a market cap of $43 billion, appears undervalued based on comprehensive Fair Value analysis. Bergin’s assessment acknowledges a slower start to the year, but he remains confident in the company’s growth narrative for the latter half of 2025.

Bergin noted that while Square’s Gross Payment Volume (GPV) has accelerated, there is near-term disappointment due to a gross profit miss and a first-quarter guidance that fell short of Wall Street’s expectations. The company maintains a healthy gross profit margin of 37.14% and has demonstrated solid revenue growth of 10.06% over the last twelve months. Additionally, there is a ’show-me’ sentiment among investors regarding Block’s anticipated performance ramp-up in the second half of 2025.

Despite these near-term headwinds, Bergin emphasized that Block’s overall messaging has stayed consistent. The company’s implied exit rates continue to be attractive as it progresses towards the Rule of 40—a financial metric suggesting companies should aim for a combined growth rate and profit margin of at least 40%.

The analyst remains bullish on Block’s valuation, suggesting that the stock is currently undervalued. He believes that the evolving go-to-market strategy for Square will support higher GPV growth. Furthermore, trends within the Cash App ecosystem indicate a robust platform expansion with a multi-year growth trajectory.

Bergin’s commentary reflects his outlook on Block Inc., suggesting that despite a lighter start to the year and investor skepticism about the company’s growth in the second half, the long-term growth prospects for Block remain promising. The company’s strategic movements are expected to foster sustained growth, reinforcing the analyst’s Buy rating and $115 price target for the stock.

In other recent news, Block Inc. reported its fourth-quarter 2024 earnings, which fell short of analyst expectations. The company announced an earnings per share (EPS) of $0.71 and revenue of $6.03 billion, both missing forecasts of $0.86 and $6.24 billion, respectively. Despite these results, Block saw an 18% year-over-year growth in full-year gross profit, reaching $8.89 billion, and a 69% increase in adjusted EBITDA to $3.03 billion. Looking ahead, Block aims for a gross profit of at least $10.22 billion in 2025.

Analysts have responded to these developments with mixed assessments. RBC Capital Markets maintained an Outperform rating on Block, with a price target of $110, highlighting the potential of the new Afterpay-enabled Cash App Card to drive growth. In contrast, Keefe, Bruyette & Woods lowered their price target from $100 to $87, while keeping a Market Perform rating, citing weaker first-quarter guidance as a concern. Both firms emphasize the importance of Block’s product and marketing initiatives in achieving future growth.

Block’s management remains optimistic, planning to increase marketing spend by 20% and focusing on product innovation and strategic investments. The company is also investing in its sales force to capture more high-value clients and expand its market reach. These recent developments underscore Block’s commitment to enhancing its financial services offerings and expanding its ecosystem through initiatives like the Cash App Card and the neighborhood network strategy.

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