Morgan Stanley upgraded Block Inc to an Overweight rating and established a $93 price target, saying the payments company has widened its potential market and positioned itself for faster growth. The brokerage attributed the upgrade to product enhancements, new customer offerings and more flexible pricing that together have expanded the company's addressable market.
The firm pointed to specific product and pricing moves that began influencing results in early 2025. On the consumer side, Block expanded credit offerings inside Cash App; fourth-quarter consumer lending originations were up 69% year over year, while Cash App Borrow originations rose 223% year over year. On the Seller side, changes to pricing attracted larger merchants and increased adoption of complementary services, supporting higher seller engagement.
Those actions have coincided with a pickup in growth metrics. Morgan Stanley noted that gross profit increased 24% in the fourth quarter of 2025. That represents a recovery from the slowdown seen between 2022 and 2024, when gross profit growth decelerated to 18% in 2024 from 36% in 2022 as earlier higher pricing constrained market reach.
Key operating indicators also showed improvement. Seller gross payment volume accelerated from the second quarter of 2025 onward. Cash App gross profit climbed 33% in the fourth quarter, and monthly active users rose to 59 million in 2025 from 57 million in 2024. In the fourth quarter, Cash App added 1 million primary banking actives sequentially, bringing that total to 9.3 million.
Separately, Block plans to reduce headcount by about 40% to roughly 6,000 employees as part of an effort to replace human labor with computing power. Morgan Stanley linked potential profitability upside to these efficiency measures and to the company's application of artificial intelligence to improve margins.
On valuation, Morgan Stanley set its $93 price target using a multiple of 18 times 2027 adjusted earnings per share. The brokerage described that target as appearing conservative in light of expected revenue acceleration and projected roughly 26% EPS growth in 2027. In connection with this view, Morgan Stanley moved its valuation framework away from a prior sum-of-the-parts approach based on EBITDA to an adjusted EPS basis, which incorporates stock-based compensation.
Analysts at the firm raised their EPS estimates to reflect the stronger top-line momentum and the potential for higher profitability driven by AI initiatives. The 2026 EPS estimate was lifted to $3.81 from $3.19, while the 2027 forecast increased to $5.19 from $4.10.
Bottom line - Morgan Stanley's upgrade rests on a combination of product-led expansion of addressable markets, improving growth and profitability measures across Cash App and Seller segments, a significant headcount reduction tied to automation, and an updated valuation methodology that emphasizes adjusted EPS.