Block Inc (XYZ) Stock Forecast & Price Target

Block demonstrates a strong outlook for profitability, with expectations of incremental margins increasing each year and a projected 17% year-over-year gross profit growth reaching $11.98 billion by FY26. The company is also set to grow adjusted operating income by approximately 31% year-over-year to $2.70 billion and is focusing on strategic investments to bolster marketing and sales efforts, anticipating a 15% year-over-year increase in Net Variable Revenue (NVA) for FY25. With plans to enhance synergies between Square and Cash App, along with a favorable economic shift towards digital payments, Block is positioned for substantial growth and a strengthened market presence.

Block's outlook remains negative primarily due to persistent challenges in its business model, particularly its reliance on small and medium-sized businesses (SMBs) and underbanked consumers, which are highly susceptible to economic downturns. The company's revenue growth has stagnated, with new volume added (NVA) remaining flat from FY22 to FY24, indicating inefficiencies in its go-to-market strategy and execution. Additionally, Block's current valuation, trading at a significant discount to industry peers with an FY26 EV/EBITDA multiple of approximately 8.5x compared to the industry average of 20x, suggests a lack of investor confidence in its future profitability and growth potential.