Block Stock Soars: Fintech Giant Gets Analyst Upgrade

Truist Securities has upgraded Block's stock to a 'buy' rating, anticipating significant upside potential driven by improving momentum and a more attractive valuation. Analyst Matthew Coad has set a price target of $77, representing an increase from $72 and implying a potential 29% gain for the fintech stock. Coad noted that despite initial concerns about margin expansion and multiple compression due to a business mix shift towards lending, recent developments suggest a positive outlook.

Improvements observed include a 40% workforce reduction and a de-rating of the stock, now trading at 12 times projected 2027 earnings per share. Coad also anticipates potential upside in capital returns as free cash flow generation strengthens. The analyst pointed to encouraging new business momentum within Square, where volume growth rose by 27% year over year in the fourth quarter, with expectations for this trend to accelerate in 2026 and 2027.

Furthermore, Block has seen a resurgence in monthly transacting actives for Cash App, adding 2 million users over the past two quarters. This growth is partly attributed to features like Cash App Borrow and Cash App Green, which are increasing activity among previously less frequent users. Concurrently, new business applications in the U.S. have risen by 15% year over year after a period of stagnation, suggesting potential for increased U.S. business formation and growth in Square's net new accounts. Outsized growth in its international business also continues to contribute positively to Square's overall volume expansion.