02:42 PM EST, 11/07/2025 (MT Newswires) -- Block's (XYZ) payments solution provider, Square, missed third-quarter gross profit growth estimates despite higher payment volume, Morgan Stanley said in a note emailed Friday as the financial-technology company's stock slumped.

Late Thursday, Block reported quarterly results that missed Wall Street's forecasts, even as gross profit rose 18%, driven by the Cash App division's 24% growth.

Square's gross profit climbed 9% to $1.02 billion, 1 percentage point below the consensus and Morgan Stanley's view, the brokerage said.

Block shares were down 8.3% in Friday afternoon trade, and have fallen about 23% so far this year.

Square's gross payment volume, the total dollar amount of all card and bank payments processed by sellers using the platform, increased 12%.

"Into the print, investors were focused on solid GPV acceleration driven by salesforce additions and upmarket momentum, which we think Square largely delivered on," Morgan Stanley said. "But we believe many were likely disappointed by the (third-quarter) Square gross profit growth miss and (about three-percentage-point) spread between GPV and gross profit growth, driven primarily by a 2.6 (percentage point) gross profit headwind from processing costs associated with a partner transition announced last quarter, along with hardware discounting."

Morgan Stanley reiterated its equal-weight rating on Block's shares, while lowering the price target to $71 from $77.

"Management expects this delta to continue into (the fourth quarter) despite commentary from the (second-quarter) call that indicated that (fourth-quarter) gross profit should track roughly in line with GPV growth," Morgan Stanley said.

For full-year 2025, Block expects gross profit of $10.24 billion, reflecting a 15% increase from last year. Analysts polled by FactSet are looking for $10.20 billion.

Morgan Stanley raised its 2025 gross profit growth estimate for Block to 14.5% from 14.4%, taking into account better-than-expected Square GPV growth. It now projects a 19% gross profit rise in Cash App, up from the previous estimate of 17%.

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