Key Takeaways
- Morgan Stanley elevated Block (XYZ) to Buy from Hold, boosting its price objective to $93 from $72, driven by accelerated growth prospects and broader market opportunities.
- The company revealed plans to reduce its workforce by approximately 40%, trimming headcount to about 6,000 employees, with artificial intelligence taking over many functions.
- Bank of America increased its price objective to $86 from $75, pointing to projected 18% gross profit expansion in 2026 and adjusted operating margin climbing to 26%.
- Cash App’s gross profit surged 33% during Q4, with monthly active users reaching 59 million and consumer lending originations soaring 69% annually.
- Analysts maintain a Strong Buy consensus on XYZ shares, with a mean price objective of $86.08, suggesting approximately 58% potential upside.
Shares of Block experienced a dramatic surge of approximately 17% during Friday’s pre-market session following CEO Jack Dorsey’s announcement of substantial workforce reductions totaling around 40%.
The restructuring plan will reduce the company’s employee base to approximately 6,000 workers, with artificial intelligence systems expected to handle the displaced workload.
Morgan Stanley’s James Faucette swiftly elevated his rating on XYZ from Hold to Buy, establishing a fresh price objective of $93, representing an increase from his previous $72 target.
Faucette emphasized what he characterized as “accelerated expansion and broadened total addressable market,” observing that enhanced product offerings and more adaptable pricing strategies have unlocked fresh market segments for the company.
His updated earnings estimates now project $3.81 per share for 2026, up from $3.19, while his 2027 forecast rose to $5.19 from $4.10.
Morgan Stanley‘s $93 price objective reflects an 18x multiple on projected 2027 adjusted earnings. The firm suggested this valuation might actually be understated, considering anticipated revenue momentum and approximately 26% earnings growth expected in 2027.
In a shareholder letter, Dorsey disclosed that more than 4,000 workers are being notified of termination or entering consultation processes. CFO Amrita Ahuja characterized the restructuring as strategic positioning for Block’s “upcoming phase of sustained expansion.”
Leadership emphasized that margin enhancement stems from operational improvements rather than reactive cost-cutting due to business deterioration. This messaging appeared to resonate positively with investors.
Cash App and Lending Demonstrate Robust Growth
Cash App’s gross profit advanced 33% during Q4 2025, while monthly active users expanded to 59 million from the prior year’s 57 million.
The platform added 1 million primary banking users in Q4 exclusively, elevating that metric to 9.3 million total.
Consumer lending originations increased 69% on an annual basis in Q4, while Cash App Borrow originations skyrocketed 223%.
Within the Seller segment, revised pricing structures have attracted larger merchants and enhanced adoption of supplementary services. Seller gross payment volume has shown consistent acceleration since Q2 2025.
Total gross profit expanded 24% in Q4 2025 — representing meaningful recovery from the deceleration witnessed between 2022 and 2024, when growth had declined to 18%.
Wall Street Embraces AI-Driven Strategy
Bank of America analyst Jason Kupferberg lifted his price objective to $86 from $75 while maintaining his Buy recommendation.
He highlighted Block’s projection for 18% gross profit growth throughout 2026, despite eliminating 40% of personnel, with adjusted operating margin expected to climb to 26% from the previous year’s 20%.
Kupferberg identified the “central question” as whether a leaner, AI-enhanced workforce can execute effectively. Currently, he believes market participants are expressing confidence.
The Street’s aggregate consensus on XYZ stands at Strong Buy, supported by 24 Buy ratings, two Hold recommendations, and one Sell rating.
The mean price objective among covering analysts stands at $86.08, implying roughly 58% appreciation potential from present trading levels.
Block has issued guidance calling for 18% gross profit growth during 2026, with Q4 2025 performance already demonstrating momentum aligned with that trajectory.
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