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On Friday, JPMorgan analyst Tien-tsin Huang adjusted the price target for Block Inc. (NYSE: XYZ), the financial services and mobile payment company, reducing it to $60.00 from the previous target of $90.00. Despite the lowered price target, the analyst maintained an Overweight rating on the company’s shares. According to InvestingPro data, the stock appears undervalued based on its Fair Value analysis, with analyst targets ranging from $35 to $112.
Block Inc. reported earnings that revealed a miss on the top line, with Gross Profit (GP) growing 9% against the 11% guidance. The shortfall was attributed to unexpected weaknesses in the Cash App segment. On the other hand, Square, another component of Block’s business, showed a slight outperformance. InvestingPro data shows the company maintains strong fundamentals with a healthy 37.1% gross profit margin and revenue growth of 10.1% over the last twelve months. The company’s management explained the miss by pointing to weaker inflows and reduced spending from tax refunds, which occurred after the initial guidance was issued, leading to a deceleration in Cash App GP growth to 10%.
The company has revised its guidance downward to account for a weaker macroeconomic environment than was evident in April, now expecting a growth from 9% in the first quarter to 12% for the full year 2025, compared to the previous forecast of 11% to mid-teens growth. However, there is a silver lining as Square narrowed its growth gap compared to peers, signaling potential positive outcomes from recent investments and suggesting that Cash App’s new network expansion strategy might yield results in a less competitive market.
The adjustment in JPMorgan’s price target reflects a more conservative stance, with estimates now slightly below the company’s guidance on Gross Profit but in line with profit expectations for the fiscal year 2025. JPMorgan’s analysts express cautious optimism, acknowledging the high execution bar set by management, which has labeled the first quarter as a low point with plans in place to achieve growth acceleration.
Investors and analysts alike are poised to gain further insights into Block’s strategy during an upcoming conversation with Block Head Jack Dorsey at JPMorgan’s TMC Conference on May 13, 2025. In the meantime, Block’s stock is trading at a P/E ratio of 12.6x with a current ratio of 2.33, indicating strong liquidity. InvestingPro analysis reveals seven additional key insights about Block’s financial health and growth potential, available exclusively to subscribers through their comprehensive Pro Research Report.
In other recent news, Block Inc reported its first-quarter earnings for 2025, revealing a miss on both earnings per share (EPS) and revenue forecasts. The company posted an EPS of $0.56, falling short of the expected $0.98, and revenue came in at $5.77 billion compared to the forecasted $6.21 billion. Despite the earnings miss, Block’s gross profit increased by 9% year-over-year to $2.29 billion, and adjusted EBITDA grew by 15% to $813 million. The company’s Square and Cash App segments both experienced growth in gross profit, with increases of 9% and 10%, respectively. However, analysts may reassess their projections due to the earnings shortfall, as noted by the company’s expectation of a 12% gross profit growth for the full year 2025. Additionally, the company’s strategic initiatives, including product innovation and go-to-market enhancements, are expected to drive growth in the latter half of the year. Block’s CEO, Jack Dorsey, emphasized the company’s focus on expanding its network, particularly with teens and families, and mentioned the potential of the Bitcoin hardware supply industry as a revenue opportunity.
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