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Investing.com -- Morgan Stanley (NYSE:MS) raised its price target on Block Inc (NYSE:XYZ) to $73 from $65, citing stronger-than-expected trends in Cash App and a more resilient macro backdrop.
The Wall Street giant maintained its Overweight rating on the stock, pointing to room for upward estimate revisions into the second half of the year.
It now forecasts Cash App gross profit growth of 15% in 2025, up from 14%, and expects 12% growth in the second quarter alone, compared to a prior estimate of 9%.
“We’re modestly raising our Cash App gross profit growth forecasts and look for +15% this year,” analysts led by James E. Faucette said, noting that April data showed an acceleration in inflows per active user to +9% from +5% in March and February.
Improved consumer spending and stable employment trends were key drivers behind the revision. CFO comments at a recent conference confirmed that April saw Cash App gross profit up 13% year-on-year, compared with 7% in March, excluding one-time items.
Morgan Stanley also revised its valuation model to reflect recent multiple expansion across peers such as Affirm (NASDAQ:AFRM) and PayPal (NASDAQ:PYPL). It now applies a 2.5x multiple to Cash App’s 2026 gross profit forecast, up from 2x, and raised its EV/EBITDA assumption on Square Seller to 11.5x from 11x.
But while the bank remains constructive on Block’s long-term trajectory, it currently prefers Chime Financial (NASDAQ:CHYM) over Block within the low- to
mid-income U.S fintech banking space.
“We see better upside as we’ve observed better execution, more consistent product development, and better attach of primary account relationships among Chime’s customers vs. Cash App,” the analysts wrote.
They note that Cash App’s concentration of lower-income users may continue to constrain its volume and monetization potential.
“We expect the company will need to rely more on credit expansion to support durable double-digit gross profit growth,” analysts continued, adding that sustained improvements in inflows per active user and direct deposit accounts will be more reliable indicators of long-term growth than short-term gains from higher Borrow and Afterpay volumes.
Meanwhile, the Seller estimates remain unchanged. First-quarter U.S. gross payment volume (GPV) growth came in at 5.6%, which was in line with expectations and consistent with broader payment trends, supporting a view of modest acceleration through the year.