11:24 AM EST, 11/07/2025 (MT Newswires) -- Block's (XYZ) Q3 earnings and margin miss due to higher general and administrative expenses became a point of frustration for investors, Morgan Stanley said in a Friday research note.

Despite outperforming in Cash App and Square gross payments volume acceleration driven by upmarket momentum, investors were disappointed by lower-than-expected Q3 Square gross profit growth due to hardware discounting and processing cost headwinds linked to a partner change announced last quarter, analysts wrote.

While the spread between GPV and gross profit growth is likely to continue into Q4, the brokerage said it is encouraged by acceleration in US GPV driven by distribution enhancements, new products, and strength in food and beverage, according to the note.

Morgan Stanley now expects fiscal 2025 gross profit growth of 14.5% from 14.4% earlier. For 2026, the brokerage expects gross profits of $11.60 billion from $11.33 billion previously.

The brokerage said it reiterated its equalweight rating on the stock and cut its price target to $71 per share from $77.

Price: 64.13, Change: -6.81, Percent Change: -9.59