Citi cuts Block Inc. price target to $90, maintains Buy rating

On Thursday, Citi analysts adjusted their outlook on Block Inc. (NYSE: SQ) shares, reducing the price target to $90 from the previous $108, while reiterating a Buy rating on the stock. The revision follows a detailed analysis of Block Inc.’s annual report and fourth-quarter 2024 results, alongside modifications to future projections. According to InvestingPro data, the stock is currently trading near its 52-week low of $53.54, with analyst targets ranging from $40 to $125. The company maintains a strong financial health score, rated as "GOOD" by InvestingPro’s comprehensive analysis.

The analysts’ statement highlighted the recalibration of their model for Block Inc. to include the latest 10-K data and fourth-quarter 2024 performance. The updated model now accounts for a slightly elevated top-line growth expectation, offset by a modest decrease in margin forecasts. Block’s revenue grew by 10% in the last twelve months, with a gross profit margin of 37.14%. Despite these changes, Citi analysts suggest that ongoing investments in product development and sales/marketing are anticipated to bolster revenue growth excluding Bitcoin transactions through to 2026, with improved margin scalability expected.

Block Inc.’s current position is described as a "show me" story by the analysts, who point to the need for evidence of stabilization and enhanced growth within the Seller ecosystem, as well as increased monetization of the Cash App platform. Despite these challenges, the recent decline in stock price is seen as an opportunity for investors to buy in at an attractive price point. InvestingPro analysis suggests the stock is currently undervalued, with additional insights available in the comprehensive Pro Research Report, which provides deep-dive analysis of Block’s financial health and growth prospects.

The new price target of $90 set by Citi reflects a combination of factors, including prevailing sector multiples, macroeconomic variability, and the necessity for Block Inc. to demonstrate ongoing progress towards its strategic goals. With a P/E ratio of 11.89 and strong liquidity position evidenced by a current ratio of 2.33, the company shows fundamental strength. The analysts’ outlook remains optimistic, suggesting that the company’s efforts to expand and refine its services could lead to favorable outcomes for investors.

In other recent news, Block Inc. reported a mixed financial performance, with its fourth-quarter earnings and revenue falling short of expectations, as noted by Piper Sandler. Despite this, the company’s adjusted EBITDA surpassed consensus estimates. Canaccord Genuity also highlighted that Block’s gross profit met guidance, though its adjusted earnings per share did not meet market expectations. Furthermore, Block’s Q1 and full-year 2025 gross profit forecasts were below consensus, yet the company plans to increase its marketing budget to capture more market share.

In terms of stock ratings, Morgan Stanley (NYSE:MS) upgraded Block from Underweight to Equalweight with a new price target of $65, citing a more balanced risk/reward profile. Conversely, Piper Sandler and Mizuho (NYSE:MFG) reduced their price targets to $85 and $86, respectively, while maintaining positive ratings. Mizuho pointed out concerns about stagnating user growth in Block’s Cash App but remained optimistic about its long-term potential.

Block’s adoption of NVIDIA (NASDAQ:NVDA)’s AI supercomputing technology marks a strategic move to advance its AI capabilities. This deployment aims to develop innovative AI models and is part of Block’s ongoing commitment to open-source technology. The collaboration with Equinix (NASDAQ:EQIX) provides Block with AI-ready data centers, enhancing their ability to tackle real-world challenges with advanced AI infrastructure.

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