TLDR
- Morgan Stanley elevated Block (XYZ) to Buy from Hold, pushing its price target up to $93 from $72, based on accelerating growth potential and broader market opportunity.
- The fintech company revealed plans to reduce its workforce by approximately 40%, decreasing headcount to about 6,000 employees, with artificial intelligence expected to handle much of the eliminated roles.
- Bank of America lifted its price target to $86 from $75, emphasizing projected 18% gross profit expansion in 2026 and adjusted operating income margin climbing to 26%.
- Cash App reported 33% gross profit growth in Q4, with monthly active users reaching 59 million, while consumer lending originations surged 69% compared to the previous year.
- Analysts maintain a Strong Buy consensus on XYZ stock, with the average price target standing at $86.08, suggesting approximately 58% potential upside.
Shares of Block skyrocketed approximately 17% during Friday’s pre-market session following CEO Jack Dorsey’s announcement of a significant workforce reduction affecting roughly 40% of employees.
The restructuring initiative will reduce the company’s employee count to approximately 6,000, with artificial intelligence systems expected to handle the workload previously managed by departing staff.
Morgan Stanley’s James Faucette swiftly elevated his rating on XYZ from Hold to Buy, establishing a fresh price target of $93, representing an increase from the previous $72 target.
Faucette highlighted what he described as “accelerated growth prospects and an expanded total addressable market,” emphasizing that enhanced product offerings and more adaptive pricing strategies have unlocked previously untapped market segments for Block.
His revised earnings per share projection for 2026 jumped to $3.81 from $3.19, while his 2027 estimate increased to $5.19 from $4.10.
Morgan Stanley‘s $93 price objective applies an 18x multiple to 2027 adjusted EPS. The investment bank suggested this valuation could prove conservative considering anticipated revenue growth acceleration and approximately 26% EPS expansion in 2027.
In a shareholder letter, Dorsey disclosed that more than 4,000 employees would be departing or entering consultation processes. CFO Amrita Ahuja characterized the workforce reduction as strategic positioning for Block’s “upcoming phase of sustainable long-term expansion.”
Executives emphasized that margin gains stem from fundamental business improvements rather than defensive cost-cutting measures—a nuance that resonated positively with investors.
Cash App and Lending Show Strong Momentum
Cash App’s gross profit jumped 33% during the fourth quarter of 2025, while monthly active users expanded to 59 million from 57 million in the prior year.
The platform added 1 million primary banking customers in Q4 alone, pushing that metric to 9.3 million.
Consumer lending originations increased 69% year-over-year in the fourth quarter, while Cash App Borrow originations exploded by 223%.
On the merchant side, revised pricing structures have attracted larger businesses and boosted adoption of supplementary services. Seller gross payment volume has shown consistent acceleration since the second quarter of 2025.
Total gross profit advanced 24% in Q4 2025—a significant improvement from the deceleration witnessed between 2022 and 2024, when growth had declined to 18%.
Analysts Back the AI Pivot
Bank of America analyst Jason Kupferberg increased his price target to $86 from $75 while maintaining his Buy recommendation.
He highlighted that Block anticipates 18% gross profit growth in 2026 despite reducing staff by 40%, and that adjusted operating income margin is projected to climb to 26% from 20% in the previous year.
Kupferberg identified the “central question” as whether a leaner, AI-enhanced workforce can execute effectively. Currently, he believes market participants are responding affirmatively.
The Street’s overall consensus on XYZ remains Strong Buy, supported by 24 Buy ratings, two Hold ratings, and one Sell rating.
The mean price target among Wall Street analysts stands at $86.08, implying roughly 58% upside potential from present levels.
Block has issued guidance calling for 18% gross profit growth in 2026, with Q4 2025 performance already demonstrating momentum in that direction.
