Compass Point says Cash App is undervalued, starts Block at Buy

Investing.com -- Compass Point initiated coverage on Block Inc. with a Buy rating and a price target of $80 per share on Wednesday, citing undervaluation of the company’s Cash App business and an expected acceleration in growth during the second half of 2025.

“We are initiating coverage of Block, Inc. with a Buy rating and $80 price target,” analysts wrote, adding that Cash App is undervalued versus peers like Chime.

Compass Point noted that investors currently pay around 20 times 2027 EBITDA for Chime, which it views as the “closest publicly traded pure play that is comparable to Cash App.”

According to the note, Compass Point believes Cash App should be valued at 15x EV/adjusted EBITDA, including stock-based compensation, while Square could be valued at 12.1x on 2026 adjusted EBITDA.

Based on current market dynamics, “Cash App could be valued at ~10x (or less) EV/EBITDA today,” the analysts said.

The firm outlined three reasons to own Block shares: undervaluation of Cash App compared to Chime, upside potential in Cash App gross profit from the anticipated ramp in Cash App Borrow, and higher margin leverage.

Compass Point’s estimates are roughly 3% higher on gross profit and 10% above consensus on adjusted EBITDA for 2026, driven by expected growth in lending products.

“We believe investors have been waiting for XYZ’s GP growth to stabilize and re-accelerate, and we anticipate this turn will begin in the 2H25,” Compass Point concluded, urging investors to buy shares ahead of the fundamental reacceleration.

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