Block declines as Morgan Stanley warns credit costs could rise
XYZ•Block shares fell about 2% in premarket trading after Morgan Stanley downgraded the payments company to equal-weight from overweight and cut its price target to $80 from $90, citing credit risks, competition and reinvestment needs.
1. Downgrade and credit risks
Morgan Stanley said longer-duration Cash App Borrow loans could slow near-term originations against tougher comparisons and raise credit losses because loans remain outstanding longer. The brokerage also said margin growth could slow after 2026 as Block increases spending to compete in small-business payments. Forty of 49 analysts rate the stock buy or strong buy, while nine rate it hold; the median price target is $97.
