Analysts say Block stock could double for these two reasons

Block Inc. (XYZ) has been in freefall lately. The company, formerly known as Square, has shed nearly one-third of its value year-to-date and 31.6% over the past year.

Its Q4 earnings report last month didn’t come to the rescue.

XYZ stock missed both revenue and earnings expectations, bringing in $6.03 billion vs. $6.29 billion expected and 71 cents per share adjusted vs. 87 cents expected.

The company management isn’t expecting a turnaround anytime soon, either.

Block forecasted gross profit of $2.32 billion, missing the $2.39 billion consensus estimate. It also projected adjusted operating income of $430 million, well below analysts’ $457 million estimate.

Wall Street reacted accordingly — XYZ plunged 17.7% the day after earnings, its biggest single-day drop since May 2022.

Despite the stock’s brutal decline, some analysts aren’t giving up on Block.

Seaport Research Partners analyst Jeff Cantwell argued that Block’s weak Q1 outlook is likely conservative and set a $113 price target for the stock. At Wednesday’s close, that’s double the current price.

“We expect near-term downside given elevated investor expectations for XYZ this year,” Cantwell wrote, “but we would be buyers on this dip, particularly at current valuations.”

Block is more than just payments

Block pioneered point-of-sale systems for small businesses, but it’s now battling stiff competition from Toast (TOST) and Fiserv’s Clover platform.

One reason analysts remain bullish is that Block isn’t just a payments company anymore. After acquiring Australian lender Afterpay in 2021 and integrating it into Cash App in February, it has expanded into lending and financial services.

The Cash App unit posted $1.38 billion in gross profit, a 16% year-over-year increase, beating the $1.36 billion analyst estimate.

Even though monthly active users only grew 2% YoY, the company made up for it with higher revenue per active customer.

Lending is now seen as a major growth driver, opening up new revenue streams in merchant services and advertising, according to Block Chief Financial Officer Amrita Ahuja.

Block CEO Jack Dorsey has also been aggressive in pushing Block into crypto.

The company launched an open bitcoin mining system called Proto, with CFO Amrita Ahuja telling CNBC that mining revenue should accelerate in the second half of 2025.

Dorsey is especially bullish on Proto’s potential.

“We think the market is large, and we believe we’re positioned to capture a significant percentage of it,” he said on the earnings call.

Block is also manufacturing its own chips, with plans to roll them out later this year alongside its full mining systems.

The company’s push into lending and crypto could provide a fresh breath of air for XYZ stock. For now, however, investors will need more than analyst optimism to get back on board.