Block stock price target cut to $85 by KeyBanc on SMB spend outlook

On Tuesday, KeyBanc Capital Markets adjusted its outlook on Block Inc. (NYSE: XYZ) by reducing the company’s price target from $115.00 to $85.00. Despite this change, the firm maintained an Overweight rating on the stock. Currently trading at $59.71, Block shows mixed signals, with InvestingPro data revealing that 10 analysts have recently revised their earnings expectations downward. The stock’s analyst targets range from $40 to $125, reflecting the market’s divided outlook. The adjustment comes after observations that point-of-sale (POS) systems are becoming a lower priority for small and medium-sized businesses (SMBs) for the years 2025 and 2026.

According to the KeyBanc analyst, Block Inc. has seen a slight decrease in the share of online POS from previous surveys but continues to lead the category. Meanwhile, its in-store POS share has remained stable. A notable improvement was seen in the customer relationship management (CRM) category, with Block now positioned as a standalone leader. The company’s market leadership is reflected in its solid financial metrics, with revenue growing at 10% and maintaining a healthy current ratio of 2.33, according to InvestingPro analysis.

The decision to lower the price target to $85 is based on a combination of factors, including a softer revenue and spending outlook for SMBs, as highlighted in KeyBanc’s 1H25 SMB IT Spend Survey. Additionally, the contraction of peer group multiples played a role in the revised price target.

Block Inc. is currently trading at 9.7 times its CY25 EBITDA, which is below the peer group average multiple of approximately 14.5 times the CY24 EBITDA. This valuation discrepancy is part of the rationale behind KeyBanc’s price target adjustment. The Overweight rating suggests that KeyBanc analysts continue to see Block as a favorable investment despite the lowered expectations for SMB spending and the overall market valuation trends. InvestingPro analysis indicates the stock is currently undervalued, with a "GOOD" overall financial health score. Subscribers can access 8 additional exclusive ProTips and a comprehensive analysis of Block’s fair value metrics through the Pro Research Report.

In other recent news, Block, Inc. has introduced Cash App Afterpay, a merged brand offering expanded payment options, including Afterpay’s Pay Over Time products. This development aims to leverage Cash App’s extensive user base with Afterpay’s Buy Now, Pay Later services. Additionally, Block’s subsidiary, Square Financial Services, Inc., has received FDIC approval to offer Cash App Borrow, a consumer loan product, nationwide. The move is designed to provide short-term loans with manageable terms, enhancing the company’s financial service offerings.

BTIG analyst Andrew Harte maintained a Sell rating on Block, despite recognizing the strategic advantages of the Cash App Borrow feature. Meanwhile, Citi analysts have adjusted Block’s price target to $90, maintaining a Buy rating, following an analysis of the company’s annual report and fourth-quarter results. The analysts anticipate ongoing investments in product development to bolster revenue growth.

Furthermore, Block has announced the deployment of NVIDIA (NASDAQ:NVDA)’s DGX SuperPOD for advancing its open-source generative AI research. This collaboration marks a significant step in Block’s efforts to explore novel AI applications and share findings with the community. The deployment is part of Block’s broader strategy to innovate in the AI space and enhance its technological capabilities.

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