Market Overview

Sell-Side Lukewarm On H&R Block Early In Turnaround

Sell-Side Lukewarm On H&R Block Early In Turnaround

Tax preparer H&R Block Inc. (NYSE: HRB) reported earnings and revenue beats Tuesday, but sell-side analysts remained cautious, saying it’s early in the company’s turnaround process as it deals with a shift toward do-it-yourself filing.

HRB beat fourth-quarter expectations — though with the help of a lower-than-expected tax rate — coming in with EPS of $4.32, ahead of the Street’s $4.25 estimate, and besting revenue forecasts.

The Analysts

BMO Capital Markets analyst Jeffrey Silber maintained a Market Perform rating and raised the target price from $26 to $27.

Oppenheimer’s Scott Schneeberger maintained a Perform rating. 

The Thesis

H&R Block, the country’s largest storefront tax preparation company, has made progress this year, gaining or maintaining share in its different types of tax preparations businesses, despite industry-wide trends toward more DIY tax filing, analysts said.

“While a revised strategy could spur a turnaround, it will likely take some time to get there,” BMO’s Silber said in a Wednesday note. 

Both Silber and Oppenheimer’s Schneeberger said H&R Block's acquisition of Wave Financial —with its small business accounting, payment and payroll business — is expensive, but could drive growth and expand the tax preparer's customer base.

“Wave appears a logical extension to HRB's core tax business, has 400,000-plus active customers and is growing its top-line, which is delivering annual revenue of around $55-60M,” Schneeberger said in a Wednesday note. H&R Block expects the deal to close around July 31.

Like Silber, Schneeberger sees positives, but said it's too early to get excited.

“Executing well, we're nonetheless maintaining our Perform early in HRB's turnaround,” the analyst said. 

Price Action

H&R Block shares were up 1.04% at $28.07 at the close Wednesday. 

Related Links:

H&R Block Falls After Goldman Sachs Downgrades Stock To Sell

H&R Block CEO Goes Out With A Beat As Q4 Results Exceed Expectations

Latest Ratings for HRB

Apr 2020Morgan StanleyMaintainsEqual-Weight
Mar 2020Barrington ResearchMaintainsOutperform
Mar 2020Morgan StanleyMaintainsEqual-Weight

View More Analyst Ratings for HRB
View the Latest Analyst Ratings


Related Articles (HRB)

View Comments and Join the Discussion!

Posted-In: BMO Capital Markets Jeffrey SilberAnalyst Color Earnings News Price Target Reiteration Analyst Ratings Best of Benzinga

Latest Ratings

WORKPiper SandlerMaintains40.0
TDOCPiper SandlerMaintains220.0
SPWHPiper SandlerMaintains15.0
NTBPiper SandlerMaintains30.0
MDBPiper SandlerMaintains226.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at