Block Inc (XYZ) Stock Forecast & Price Target

Block's stock outlook remains positive due to anticipated incremental margin growth, projected to rise to approximately 33% as the company leverages products like Cash App Borrow, which has seen a fivefold increase in loan originations over the past two years. For FY26, Block forecasts a robust 17% year-over-year growth in gross profit, reaching $11.98 billion, alongside adjusted operating income expected to increase by around 31% year-over-year to $2.70 billion. The company's strategic initiatives to enhance synergies between Square and Cash App, increase field sales representatives, and pursue high-ROI investments further indicate strong potential for continued growth and improved margins.

Block's stock faces a negative outlook primarily due to a significant downturn in revenue growth, with a downside scenario predicting an enterprise value/gross profit ratio of ~3.0x based on a FY26 gross profit estimate of $10.018 billion, reflecting substantial concerns about the company's performance in light of revenue disappointments. Additionally, management has acknowledged longstanding issues within its organizational structure and execution strategy that have contributed to stagnating new volume added from FY22 to FY24, suggesting a failure to drive meaningful growth in its core business segments. Furthermore, Block's dependence on small and medium-sized businesses, as well as underbanked consumers, raises concerns about vulnerability to economic downturns, which could further impede recovery and realization of growth targets.