Truist Securities initiates Block Inc. stock with sell rating

On Monday, Truist Securities analysts initiated coverage on Block Inc. (NYSE: XYZ) with a Sell rating and set a price target of $60.00. According to InvestingPro data, analyst targets range from $35 to $105, with 28 analysts recently revising earnings estimates downward. The stock currently trades at $61.75, and InvestingPro’s Fair Value analysis suggests the stock is currently undervalued. The analysts expressed concerns over the company’s sensitivity to macroeconomic conditions, as its two main business segments, Square and Cash App, cater to small businesses and less-affluent consumers, respectively.

The analysts highlighted that Block Inc. is focusing on expanding its lending products, such as Cash App Borrow, merchant cash advances, and Afterpay’s buy now, pay later loans, to boost growth throughout 2025. However, they caution that this strategy could lead to increased credit losses and present challenges in 2026.

Truist Securities emphasized the limited operational flexibility Block Inc. has to manage operating expenses in response to potential adverse macroeconomic conditions. This limitation raises concerns about the company’s ability to maintain performance in a challenging economic environment.

The analysts noted that while they appreciate Block Inc.’s long-term potential, the current market conditions make it a challenging stock to own. The focus remains on the company’s growth strategy and its potential impact on financial stability.

Block Inc. shares are expected to underperform compared to its peers, according to Truist Securities, due to these outlined challenges and strategic decisions.

In other recent news, Block Inc. has experienced several notable developments. Fitch Ratings upgraded Block’s Long-Term Issuer Default Rating from ’BB+’ to ’BBB-’, reflecting the company’s significant growth and improved profitability. This upgrade affects approximately $5.8 billion of debt and is supported by Block’s strong cash generation and reduced financial leverage. Additionally, Raymond (NSE:RYMD) James analysts raised the price target for Block’s stock to $79, citing confidence in Cash App’s projected gross profit growth. Wolfe Research also increased its price target for Block to $75, attributing the decision to the company’s valuation potential despite recent underperformance in the stock market. Mizuho (NYSE:MFG) Securities raised its price target to $71, linking the decision to a surge in Bitcoin prices and increased user engagement on Cash App. Furthermore, Block announced plans to integrate bitcoin payments into its Square platform, aiming for a rollout in the second half of 2025. This initiative is expected to enhance the accessibility of bitcoin payments for merchants. These recent developments highlight Block’s ongoing efforts to strengthen its market position and financial performance.

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