Financial technology company Block (XYZ) is set to release its Q2 earnings report later this week. This has some investors wondering whether it’s a good idea to buy shares of XYZ beforehand.
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What Wall Street Expects
Wall Street is expecting XYZ to report earnings of $0.59 per share in its upcoming release, pointing to a year-over-year decline of 36.6%. It is anticipated that revenues will amount to $6.32 billion, marking an increase of 2.6% compared to the year-ago quarter.
Will XYZ be able to beat these estimates? As can be seen below it has a mixed recent record of coming out ahead.
Key Insights Ahead of Earnings
In its first quarter results, Block’s gross profit came in at $2.29 billion, marking a 9% year-over-year increase. Square’s gross profit grew by 9% year-over-year driven by a 7.2% increase in gross payment volume (GPV). Cash App gross profit rose by 10% year-over-year, although consumer spending behavior during tax refund season affected inflows. The company reported an adjusted EBITDA of $813 million, up 15% year-over-year, and adjusted operating income of $466 million, a 28% increase.
Analysts are not so optimistic about its Q2 performance. Morgan Stanley analyst James Faucette recently downgraded the stock from Buy to Hold with a $73 price target. He said that most of the anticipated acceleration of Square and Cash App was already widely “built into expectations.”
While he still expects “modest acceleration in Square and Cash App GP trends into 2026,” he now prefers Chime (CHYM) in the fintech space.
Indeed, he said that Cash App’s “demographic profile of low-income customers limits the volume and monetization potential.”
Andrew Harte of BTIG raised his price target on XYZ to $80 from $70 and kept a Buy rating on the shares. He expects Cash App growth to improve while Square volume trends improve. Despite the shares rising 60% since the Q1 report, he said Block trades at a reasonable valuation based on its near- and long-term growth initiatives.
Is XYZ a Good Stock to Buy Now?
On TipRanks, XYZ has a Strong Buy consensus based on 23 Buy, 3 Hold and 2 Sell ratings. Its highest price target is $95. XYZ stock’s consensus price target is $77.96 implying a 3.55% upside.
