Block Inc (NYSE:SQ) is beginning to silence investor skepticism around its sweeping workforce reduction, with Bank of America raising its earnings estimates and reaffirming its Buy rating following the payments company's latest quarterly results.
The Wall Street bank bumped its adjusted EPS estimate to $5.37 from $5.07 and maintained its $100 price objective, citing early evidence that Block's structural reset (which included a roughly 40% cut to its workforce) is translating into measurable gains in efficiency, margins, and operating cadence.
The upgrade in estimates comes against a backdrop of lingering macro uncertainty and doubts among investors over whether the layoffs would deliver the operational improvements management had promised. BofA analysts said the quarter provided a clear answer, with results beating both its own and consensus forecasts on gross profit, operating income, and earnings per share driven by execution and cost discipline rather than one-time items.
Analysts pointed to AI tools embedded across Block's product development and internal workflows as a key accelerant, with the bank noting higher output per engineer, improved quality metrics, and structurally lower costs as early indicators that productivity gains are beginning to scale.
Management's decision to raise full-year guidance added to the constructive picture, the bank noted, reflecting growing internal confidence in the durability of the margin expansion underway.
BofA modestly trimmed its valuation multiple to 19 times from 20 times to account for the uncertain macro environment, but said the compression was more than offset by the improving earnings trajectory and sustained cost discipline following the reset.