Truist Securities initiated coverage on Block (NYSE:XYZ) with a Sell rating and a $60 price target, cautioning that the fintech firm faces growing headwinds in a late-cycle economic environment.

While the firm acknowledged Block’s long-term potential, it expressed concern about the sensitivity of both major business segments—Square and Cash App—to economic downturns. Square’s core small business clientele and Cash App’s base of lower-income consumers could be particularly vulnerable if macro conditions worsen.

Truist also highlighted increased risk stemming from Block’s recent push into lending, including Cash App Borrow, merchant advances, and Afterpay’s buy-now-pay-later services. The strategy, aimed at reigniting growth through 2025, may elevate credit loss exposure and make 2026 comparisons more challenging.

Limited flexibility to cut operating expenses was another factor weighing on Truist’s outlook, as the firm believes Block may struggle to manage profitability if economic conditions deteriorate. Overall, Truist expects the stock to underperform its peers in the near term.