Block, the payments company, has experienced a tumultuous two months that has caused Citigroup to change its perspective on the company. Since early August, Block's stock (ticker: SQ) has plummeted nearly 45% due to various setbacks. These setbacks include a 48-hour outage on its Square payments app and the abrupt departure of Square's CEO just weeks later.

Previously, Block stock was considered one of Citigroup's top picks. The bank's analysts believed that Block had attractive opportunities for developing new products and strengthening existing ones. However, due to the recent stock decline, the analysts have had to adjust their expectations for the near term. They now believe that a significant recovery by year-end is unlikely, leading them to remove the stock as one of their top picks.

Although the outlook for Block stock has become less enthusiastic, the Citigroup team still maintains a Buy rating, considering the recent plunge in the stock price to be an overshot. The team has revised its price target for Block shares from $90 to $65, which implies a more than 50% upside from the recent price of $41.41.

The analysts maintain their belief in Block's potential for rebounding and view the continued ecosystem integration and product development opportunities as too significant to overlook. However, they acknowledge that it will take time for Block to overcome its recent issues, even though they believe the stock is currently bottoming.

With a price target of $65, Citigroup anticipates an enterprise value/Ebitda multiple ranging from 25 times to 30 times, reduced from a previous multiple of 35 times to 40 times. Despite these challenges, Block stock remains resilient, showing only a slight decline of 0.9% in Wednesday trading while the S&P 500 experiences an increase of 0.4%.

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