Block’s Growth Prospects and Challenges Lead to Hold Rating

Analyst James Faucette of Morgan Stanley maintained a Hold rating on Block, boosting the price target to $72.00.

James Faucette has given his Hold rating due to a combination of factors including Block’s achievement of gross profit targets and a positive outlook for future growth. The company’s management has projected a 17% gross profit growth for 2026, which exceeds the consensus expectation of 15%, providing a sense of relief to investors. However, the challenges of maintaining this growth amid tough comparisons in the second half of 2026, particularly for Cash App, are acknowledged.
Furthermore, while Block’s medium-term growth expectations are promising, with mid-teens growth anticipated for Square and high-teens for Cash App, there are concerns about the pressure on take rates from larger merchants and the need for software attachment to drive profit. Additionally, while the company’s profitability targets align with market expectations, they may fall short of the most optimistic investor hopes. The outlook for a 30% EPS growth target, supported by share repurchases, is positive, but the low-return potential of initiatives like the connected ecosystem and Bitcoin efforts tempers the overall enthusiasm, leading to the Hold rating.