Evercore ISI reiterates Outperform on Block stock ahead of results By Investing.com

Evercore ISI reiterated an Outperform rating on Block with a $96 price target, implying meaningful upside from the current $71.81 share price. The firm expects continued turnaround progress at Square and Cash App ahead of Q1 results on May 7, while noting severance-related costs from the prior 40% headcount reduction. Investor focus will be on Cash App Borrow losses, consumer origination growth, and Square net value added, alongside the launch of the AI-enabled Square Managerbot.

Analysis

The market is likely underappreciating how much of the near-term debate has shifted from “can Block stabilize?” to “can it reaccelerate efficiently?” The AI product launch matters less as a standalone feature and more as evidence that management is trying to convert Square’s merchant base into a higher-retention workflow platform, which should lift ARPU and reduce churn if adoption is real. That creates a second-order benefit for gross profit quality: better software attach can offset some of the lending cyclicality in Cash App without needing a macro tailwind.

The main risk is that consensus may be too focused on headline earnings and too relaxed about the composition of the turnaround. Borrow losses staying “within range” is not enough if growth is coming from newer, thinner cohorts; that can keep the model looking fine in Q1 while masking weaker unit economics that show up over the next 2-3 quarters. Severance charges also matter less for reported EPS than for what they reveal about management’s willingness to prioritize margin over growth — if the operating leverage does not show through by Q2, the stock can de-rate quickly because the re-rating has already begun.

Contrarian angle: the optimistic analyst stack may already be doing the work of absorbing upside, leaving limited multiple expansion unless management surprises on Square net value added and Cash App origination mix. The most plausible disappointment is not a bad quarter, but a merely “good” quarter with no clear evidence that AI monetization is becoming material. In that case, the stock can retrace even if fundamentals remain intact, because the current setup is pricing in visible operating leverage plus strategic optionality rather than just stabilization.

The cleaner read-through is on fintech infrastructure and software-enabled SMB tooling: if Block’s AI workflow tools gain traction, smaller competitors with weaker merchant data layers may struggle to match retention economics. That also improves the odds that payments become a wedge into broader business software spend, which is a longer-duration thesis than lending or consumer volume alone.

Key Decisions for Investors

• Maintain a tactical long in XYZ into the print, but size it as a 2-4 week event trade rather than a core position; upside is credible if Square value-added growth reaccelerates, but downside is a sharp multiple reset if AI engagement is non-monetizing.
• Buy XYZ May/June upside call spreads instead of outright shares to capture a post-earnings re-rate while capping downside if Cash App borrow losses tick above expectations; best risk/reward is in defined-risk convexity.
• Pair trade: long XYZ / short a lower-quality fintech with weaker SMB software attach and less operating leverage over the next 1-2 quarters; the thesis is that Block can show margin durability while weaker peers absorb slower monetization.
• If the print shows only in-line EPS with no improvement in Square net value added, fade strength on any gap-up; that outcome would imply the turnaround is functioning operationally but not enough to justify a higher multiple.
• Watch for a Q2 follow-through signal on AI adoption and borrower mix; if the next update shows improved merchant retention and stable loan losses, add on weakness for a 3-6 month hold.