Momentum Across Core Segments Will Shape Fintech Landscape Amid Lending Risks Ahead

The analyst price target for Block has been increased modestly from $87.17 to $88.40, as analysts point to growing momentum across Square and Cash App segments, along with a broadly more optimistic outlook following recent industry research.

Analyst Commentary

Recent analyst research reveals a mix of optimism and caution regarding Block’s near- and mid-term prospects, reflecting differing views on growth acceleration, risk exposure, and valuation following the company’s latest performance updates.

Bullish Takeaways

• Bullish analysts are raising price targets on Block, citing accelerating growth within both the Square and Cash App segments as field sales and product distribution ramp up.
• Gross payment volume is showing signs of improvement, with some noting a positive inflection in larger merchant cohorts and a reacceleration of key growth drivers in the US and internationally.
• Recent earnings beats and forward-looking guidance have exceeded Street expectations. Strength in adjusted operating margins, gross profit, and liquidity is supporting calls for higher valuations.
• The company’s inclusion in major indices and its ongoing product investments are seen as catalysts for expanding market reach and sustaining gross profit growth over the mid-term.

Bearish Takeaways

• Bearish analysts warn that Block’s growth is increasingly reliant on its lending products, raising concerns over credit quality, potential losses, and the sustainability of top-line acceleration.
• Caution persists that the impact of working capital requirements and credit exposure necessary to grow lending is not yet fully reflected in market expectations or the company’s overall valuation.
• Further skepticism stems from questions about the structural durability of gross profit growth in key segments. Some predict a range-bound share price in the near term if lending continues to surge.
• Bearish perspectives also highlight that the broader payments sector remains volatile and that Block’s reliance on lending makes its future growth trajectory less certain compared to peers.

What's in the News

• TD Cowen raised Block’s price target to $95, citing a strong Q2 beat with Cash App gross profit up 16 percent and Square gross payment volume rising 10 percent. Growth was driven by product and distribution investments. (TD Cowen, Periodical)
• Oppenheimer increased Block’s price target to $92 after Q2 results exceeded expectations across gross profit, adjusted operating income, and EBITDA. The firm also noted improved Q3 guidance and a robust 2025 outlook. (Oppenheimer, Periodical)
• Stripe, a major competitor of Block’s Square segment, is in talks for a share buyback at a $106.7 billion valuation. This development is drawing industry focus on valuation momentum in the payments space. (Axios, Periodical)

Valuation Changes

• Consensus Analyst Price Target has risen slightly, increasing from $87.17 to $88.40.
• Discount Rate has declined modestly, moving from 7.71 percent to 7.65 percent.
• Revenue Growth estimates have edged down, now at 11.10 percent compared to the previous 11.26 percent.
• Net Profit Margin projections have decreased slightly, shifting from 7.36 percent to 7.21 percent.
• Future P/E ratio has increased from 26.10x to 27.10x. This reflects a higher expected valuation multiple.