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Investing.com - Bernstein SocGen Group has reiterated an Outperform rating and $95.00 price target on Block Inc. (NYSE:XYZ), highlighting the company’s expanding lending business as a key growth driver. According to InvestingPro analysis, Block currently trades at $75.81 and appears undervalued based on its Fair Value estimate.
The firm’s analysis reveals that Block’s lending business now comprises approximately 22% of the company’s gross profit and drove more than 50% of gross profit growth in the second quarter of 2025. Block reported 14% gross profit growth in Q2, up from 9% in the previous quarter. With a market capitalization of $46.38 billion and a healthy gross profit margin of 39.64%, Block maintains strong financial fundamentals, including a solid current ratio of 1.96.
Bernstein notes that accounting dynamics complicate the analysis, as risk losses are recorded below the gross profit line. The firm estimates that if transaction, risk, and loan losses were included in the gross profit calculation, Q2 growth would have been 10% rather than the reported 14%. InvestingPro data reveals that Block has achieved a perfect Piotroski Score of 9, indicating strong financial health. Subscribers can access 10 additional exclusive ProTips and comprehensive financial metrics for deeper analysis.
Looking ahead, Bernstein expects Block’s Borrow gross profit growth to accelerate in the second half of 2025, driven by expansion into additional states and improved gross margins from originating loans through Square Financial Services. The firm projects Borrow will represent 15% of Cash App’s gross profits by the end of 2025, up from 8% in 2024. With annual revenue of $23.83 billion and a robust financial health score rated as "GOOD" by InvestingPro, Block appears well-positioned to execute its growth strategy.
Bernstein also identifies Buy Now, Pay Later functionality on Cash App Card as a potential growth catalyst, which generated approximately $7 million in Q2 and could drive several percentage points of Cash App gross profit growth in 2026.
In other recent news, Block Inc. has announced the pricing of $2.2 billion in senior notes, which includes $1.2 billion in 5.625% notes due in 2030 and $1.0 billion in 6.000% notes due in 2033, increasing the offering size from the initially planned $1.5 billion. This move comes alongside S&P Global Ratings assigning a ’BB+’ rating and Fitch Ratings a ’BBB-’ rating to a $1.5 billion senior unsecured notes offering, reflecting Block’s financial strategies. On the analyst front, Bernstein SocGen Group has reiterated its Outperform rating on Block, highlighting the company’s lending business as a key driver of gross profit growth. Meanwhile, Mizuho has raised its price target for Block to $88 from $71, citing improvements in Square’s point-of-sale volumes and market share. Additionally, Block has introduced a new modular bitcoin mining system called Proto Rig, along with open-source fleet management software, Proto Fleet. This development was showcased at Core Scientific’s facility, where Proto Rigs are actively used. These recent developments reflect Block’s ongoing strategic initiatives and market activities.
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