Key Highlights
- Morgan Stanley elevated Block (XYZ) to Buy status, increasing its price target to $93 from $72, pointing to accelerated growth prospects and broader market opportunities.
- Block revealed plans for a workforce reduction of approximately 40%, decreasing staff to around 6,000 employees, with artificial intelligence taking over many functions.
- Bank of America increased 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 gross profit expanded 33% in Q4, monthly active users reached 59 million, and consumer lending originations surged 69% year over year.
- Analysts maintain a Strong Buy consensus on XYZ, with an average price target of $86.08, suggesting approximately 58% potential upside.
Block’s shares jumped approximately 17% during Friday’s pre-market session following CEO Jack Dorsey’s announcement of a roughly 40% workforce reduction.
The restructuring will bring total headcount down to approximately 6,000 employees, with artificial intelligence technologies handling much of the workload previously managed by staff.
Morgan Stanley analyst James Faucette promptly elevated XYZ from Hold to Buy, establishing a fresh price target of $93, increased from $72.
Faucette highlighted what he described as “faster growth and an expanded TAM,” observing that product enhancements and more adaptable pricing strategies have unlocked additional market segments for Block.
He adjusted his 2026 EPS forecast upward to $3.81 from $3.19, while raising his 2027 projection to $5.19 from $4.10.
Morgan Stanley‘s $93 price target uses a multiple of 18 times 2027 adjusted EPS. The firm observed that this valuation could prove conservative, considering anticipated revenue acceleration and approximately 26% EPS expansion in 2027.
Dorsey explained in a shareholder letter that more than 4,000 employees will be departing or entering consultation processes. CFO Amrita Ahuja characterized the reductions as strategic positioning for Block’s “next phase of long-term growth.”
Leadership emphasized that margin expansion stems from fundamental business improvements rather than reactive cost-cutting measures. The market responded favorably to this distinction.
Cash App and Lending Show Strong Momentum
Cash App gross profit increased 33% in Q4 2025, while monthly active users expanded to 59 million from 57 million in 2024.
Cash App brought on 1 million primary banking actives during Q4 alone, pushing that total to 9.3 million.
Consumer lending originations grew 69% year over year in Q4, while Cash App Borrow originations soared 223%.
On the Seller platform, pricing adjustments have attracted larger merchants and boosted adoption of supplementary services. Seller gross payment volume has been gaining momentum since Q2 2025.
Total gross profit increased 24% in Q4 2025 — marking a significant rebound from the deceleration between 2022 and 2024, when growth had declined to 18%.
Analysts Back the AI Pivot
Bank of America’s Jason Kupferberg lifted his price target to $86 from $75 while maintaining his Buy rating.
He noted that Block anticipates 18% gross profit growth in 2026, even while reducing staff by 40%, and that adjusted operating income margin is projected to climb to 26% from 20% in the prior year.
Kupferberg identified the “key debate” as whether a leaner, AI-driven organization can execute successfully. His assessment indicates investors are currently confident in this approach.
Wall Street’s collective consensus on XYZ stands at Strong Buy, supported by 24 Buy ratings, two Holds, and one Sell.
The average price target among analysts stands at $86.08, representing roughly 58% upside potential from current trading levels.
Block has set guidance for 18% gross profit growth in 2026, with Q4 2025 performance already demonstrating momentum in that direction.
