TD Cowen analyst Bryan Bergin had an interesting meeting with Block’s (XYZ) investor relations and came back highly encouraged, particularly regarding Block’s underlying changes and execution drivers to successfully reaccelerate Square and Cash App platforms. Bergin maintained his “Buy” rating on XYZ stock and a price target of $95, implying 25.3% upside potential from current levels.
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Bergin noted that investor worries about Block’s lending products are expected to ease as the company provides more clarity on its lending strategy and the benefits it brings to user engagement and long-term growth. He believes that with consistent second-half performance, XYZ stock will rise higher.
First, Let’s Learn About Block
Jack Dorsey-led Block operates a fintech platform and offers several payment services. Square is Block’s point-of-sale platform that enables sellers to accept card payments and manage their business operations. Meanwhile, Cash App is a digital wallet that allows users to send, receive, save, and borrow money, access a debit card, and invest in stocks and bitcoin.
Bergin noted that Block is on track to accelerate the Square and Cash App in the second half and achieve the Rule of 40 in 2026. The Rule of 40 refers to a metric that balances growth and profitability, highlighting that the sum of a company’s revenue growth rate and its profit margin should equal or exceed 40%. For reference, Block is expected to exit 2025 with a projected 39% combined gross profit and adjusted operating income margin.
Square and Cash App Set to Accelerate in 2H
Block’s team showed optimism about a steady rebound in Cash App’s performance, driven by expanding lending products such as Borrow, its short-term consumer loan, and its growing Buy Now Pay Later (BNPL) offering.
Borrow now serves six million active users, and backed by the Square Financial Services’ expanded charter, the loan product’s reach has doubled to encompass all 50 states. This expansion is carefully managed with user engagement as a prerequisite. Block’s loans begin small and scale responsibly with demonstrated repayment behavior. This creates a growing cycle of user engagement that is expected to increase Cash App’s profit and keep its growth steady.
At the same time, Square is emerging as a key growth pillar, with strategic go-to-market initiatives and product progress aimed at boosting its Gross Transaction Volume (GPV).
Is XYZ Stock a Buy, Hold, or Sell?
Analysts remain divided about Block’s long-term stock outlook. On TipRanks, XYZ stock has a Moderate Buy consensus rating based on 27 Buys, four Holds, and three Sell ratings. The average Block price target of $87.78 implies 15.8% upside potential from current levels. Year-to-date, XYZ stock has lost 10.8%.
