HSBC has upgraded Block to Buy from Hold, raising its price target to $77 from $70 following the company's Q4 2025 results. Analyst Saul Martinez cited a "material increase in earnings power" and a 20% stock upside potential, noting the shares had experienced a "sizeable valuation de-rating" over the past year.

Martinez emphasized that Block's planned workforce reduction of nearly half is not driven by operational weakness but rather aims to "meaningfully increase earnings power." The bank raised its 2026 adjusted operating earnings estimate by 20% and lifted its 2026 adjusted EPS assumption by 16%, aligning broadly with Block's guidance. HSBC highlighted that earnings improvements are back-end loaded, with management indicating about 60% of 2026 adjusted operating earnings will be generated in the second half.

HSBC's updated 2026 EPS estimate of $1.16 annualizes to $4.61, just 4% below current 2027 consensus estimates. The bank expects consensus estimates to rise, with its own 2027 forecasts running 6% to 9% above current levels. HSBC also introduced 2028 estimates as part of its revised outlook, concluding that Block's valuations have de-rated materially, creating an attractive risk-reward profile.