Evercore ISI upgrades Block Inc. stock rating on growth prospects

On Tuesday, Evercore ISI analysts upgraded Block Inc. (NYSE: XYZ) stock rating from In Line to Outperform, raising the price target to $75 from $58. According to InvestingPro data, the stock currently trades at a P/E ratio of 14.59 and appears undervalued based on Fair Value analysis. The analysts cited several factors for the upgrade, including moderated concerns about Cash App lending, steady consumer spending trends, and promising new product releases.

The analysts highlighted that Cash App lending will not be as aggressive as previously anticipated following first-quarter earnings. Feedback from industry contacts and company follow-ups provided a deeper understanding of the growth and risk balance, reducing initial concerns. Additionally, low-end consumer spending trends remain steady, aligning with Block’s recent reports of an April rebound in Cash App gross profit. The company maintains healthy financials with a current ratio of 2.27, indicating strong liquidity to support its lending operations.

Block’s recent product developments at Square, including new hardware and software, are seen as positive indicators for future growth and development efficiency. The bi-annual product updates and reorganization in product and engineering are credited with driving better growth and competitiveness.

Sales efforts under Nick Molnar were also noted as a key value driver. The analysts were impressed with his go-to-market plan and execution success, particularly in building out sales channels such as tele sales and field personnel. Despite a recent 5% increase in stock value over the past week, the analysts believe Block’s valuation remains attractive, with the stock still down 27% year-to-date.

Near-term risks include potential losses from Cash App Borrow and exposure in new markets, alongside concerns about direct deposit trends and macroeconomic headlines. The company maintains strong financial health with an Altman Z-Score of 3.41, indicating low bankruptcy risk. However, Evercore ISI emphasizes that the most severe tariff-related scenarios appear somewhat mitigated in recent weeks.

In other recent news, Block Inc. has seen a flurry of activity, starting with Truist Securities initiating coverage with a Sell rating, citing concerns about the company’s sensitivity to macroeconomic conditions and its focus on expanding lending products. Meanwhile, Raymond (NSE:RYMD) James raised Block’s price target to $79, maintaining an Outperform rating, driven by positive comments from Block’s management and expected growth in Cash App Borrow’s gross profit. Additionally, Mizuho (NYSE:MFG) Securities increased Block’s price target to $71, highlighting a correlation between Bitcoin’s value surge and increased user engagement on Cash App. Wolfe Research also lifted Block’s price target to $75, noting the company’s strong adjusted net income growth despite recent stock underperformance.

In terms of product developments, Block announced plans to integrate bitcoin payments on its Square platform, allowing merchants to accept bitcoin through the Lightning Network. This initiative aims to enhance the utility of bitcoin and is expected to roll out in the second half of 2025. Block’s broader engagement with bitcoin includes various products like Bitkey and Proto, which focus on enhancing bitcoin accessibility and decentralizing mining. These recent developments indicate a strategic push by Block to integrate cryptocurrency into its offerings, aiming to empower merchants and increase user engagement.

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