Piper Sandler says operational discipline, stronger monetization and AI-driven efficiencies could drive Block’s next phase of earnings growth.
- Piper Sandler upgraded Block two notches to ‘Overweight,’ stating its current valuation understates the durability of its earnings outlook.
- The firm believes AI-driven efficiencies and tighter cost controls should help accelerate Block’s operating income growth over time.
- Wall Street remains broadly bullish on Block, with 36 of 44 analysts rating the stock a ‘Buy’ or ‘Strong Buy.’
Block Inc. (XYZ) shares could have more room to run as improving profitability and tighter cost controls strengthen the company’s earnings outlook, according to Piper Sandler.
The brokerage double upgraded the payments company to ‘Overweight’ from ‘Underweight’ following a transfer of coverage and raised its price target to $100 from $58, implying around 28% upside from Monday’s close.
Piper initiated coverage of the payments and consumer finance sector with a “selectively constructive” stance, according to TheFly.
The XYZ stock rose nearly 1% in premarket trading but reversed course as the session progressed. The shares were down nearly 2% in Tuesday afternoon trading at the time of writing.
Why Piper Sees More Upside For XYZ
Piper Sandler said its Overweight-rated stocks stand out for their durable fundamentals, including strong network activity, customer engagement, disciplined lending, capital returns, operating leverage and earnings growth that can drive share appreciation without relying on higher valuation multiples.
For Block, the firm believes the recent valuation reset has created an attractive entry point.
“Valuation compression has created selective opportunity,” the analyst wrote, according to CNBC. Piper said it views Block “as a gross profit growth and margin expansion story whose current valuation does not fully reflect the durability of its earnings trajectory.”
XYZ’s Growth Outlook Remains Intact
Piper said Block can continue delivering double-digit growth without relying on overly optimistic assumptions, pointing to stronger monetization efforts across its Square and Cash App ecosystems.
The brokerage acknowledged that investors’ concerns are valid, citing slower network volume growth, pressure on digital payments monetization and potential risks from a weakening labor market. But it stated that the sector-wide valuation reset has been more severe than the underlying earnings outlook, which remains resilient across much of its coverage universe, according to TheFly.
AI And Cost Discipline Add To Bull Case
Beyond revenue growth, Piper expects Block’s ongoing cost discipline and AI-driven operational efficiencies to further expand margins.
The firm said those productivity gains should allow gross profit growth to translate into faster adjusted operating income growth, strengthening the company's long-term earnings profile and supporting additional upside for the stock, according to CNBC.
XYZ Stock: Stocktwits Retail Sentiment
On Stocktwits, retail sentiment for XYZ remained ‘bullish,’ unchanged in the last 24 hours, while message volume was ‘high.’ In the last 30 days, message volume has risen 150%.
Piper Sandler’s call falls in line with consensus on Wall Street, with analysts in general being bullish on Block. Data from Koyfin shows that 36 out of the 44 analysts covering the stock rate it a ‘Buy’ or ‘Strong Buy.’
The XYZ stock has risen nearly 16% year-to-date.
Also Read: PLTR Stock Gains 2% — Japan Weighs Palantir AI Defense System For Military Command Network, Says Report
For updates and corrections, email newsroom[at]stocktwits[dot]com.<
