- Block shares rose on Wednesday after Truist and Rothschild upgraded the stock.
- Analysts cited Cash App growth, margin expansion, and buybacks as drivers of earnings-per-share upside.
- The upgrades came after Block announced an AI-led workforce reduction last month to improve efficiency.
Block (XYZ) shares edged higher on Wednesday morning after analysts upgraded the stock, citing expected upside from Cash App growth and recent workforce reductions aimed at improving margins.
Truist upgraded Block to ‘Buy’ from ‘Hold’ with a price target of $77, up from $72, following the company's recent announcement of a 40% reduction in its workforce.
The firm said it saw mid-to-high single-digit upside to Street out-year earnings estimates, driven by gross profit growth in its mobile app service, Cash App, better-than-expected margin expansion, and share buybacks.
According to TheFly, Rothschild & Co Redburn also upgraded Block to ‘Neutral’ from ‘Sell’, raising the price target to $55 from $45. The firm said the market was increasingly viewing Block as a neobank.
Block’s stock was up nearly 2% at market open on Wednesday. On Stockwits, retail sentiment around XYZ remained in the ‘bearish’ zone, while chatter levels around it remained at ‘extremely low’ levels over the past day.
Layoffs and AI Push Drive Cost Restructuring
The upgrades came after Block announced a nearly 40% workforce reduction last month, as part of a broader effort to streamline operations. The job cuts were linked in part to the company’s increasing focus on artificial intelligence and internal restructuring. Block operates digital payments platforms, including Cash App and Square.
Chief Executive Officer and co-founder Jack Dorsey said that “intelligence tools we’re creating and using, paired with smaller and flatter teams, are enabling a new way of working,” which helped the company become more efficient.
Similarly, Block Chief Financial Officer and Chief Operating Officer Amrita Ahuja told Fortune that the decision was made from “a position of strength,” adding that the company aimed to execute the changes while continuing to deliver for customers and stakeholders.
XYZ’s stock is down nearly 7% this year but was up nearly 2% over the past 12 months.
Read also: S&P 500 Goes On-Chain With First Licensed Perpetual Contract On Hyperliquid
For updates and corrections, email newsroom[at]stocktwits[dot]com.