Oppenheimer Reiterates a Hold Rating on H&R Block

By Jason Carr

In a report released today, Scott Schneeberger from Oppenheimer reiterated a Hold rating on H&R Block (NYSE: HRB). The company’s shares closed yesterday at $22.16, close to its 52-week low of $19.18.

Schneeberger wrote:

“Releasing seasonally light F2Q17 on 12/7/16, HRB’s call will substitute for the company’s historical December Investor Day. Although HRB doesn’t historically provide a strategic/pricing/top-line outlook, we do anticipate FY17 adjusted EBITDA guidance (which may be flat/down y/y). Anticipating multiple moving parts as HRB’s expected to strategically shift to “arrest (recent year) client decline,” we’re cautious on elevated uncertainty. We’ve assessed storefront pricing cuts/Refund Advance Loan introduction impact on volume vs. opex scenarios and view HRB’s opportunities also bearing margin risk should marketing/execution be sub-optimal. Maintaining Perform, we’re modifying FY17/FY18 estimates on the aforementioned uncertainty. Not affecting our estimates, the new political environment also creates a moderate longer-term overhang.”

According to TipRanks.com, Schneeberger is a top 25 analyst with an average return of 13.0% and a 66.8% success rate. Schneeberger covers the Services sector, focusing on stocks such as New Oriental Education Tech, Capella Education Company, and Kansas City Southern.

Currently, the analyst consensus on H&R Block is Moderate Sell and the average price target is $18, representing a -18.8% downside.

In a report issued on November 16, Morgan Stanley also downgraded the stock to Hold with a $25 price target.

Based on H&R Block’s latest earnings report for the quarter ending July 31, the company posted quarterly revenue of $125 million and GAAP net loss of $124 million. In comparison, last year the company earned revenue of $128 million and had a GAAP net loss of $145 million.

Based on the recent corporate insider activity of 48 insiders, corporate insider sentiment is positive on the stock. This means that over the past quarter there has been an increase of insiders buying their shares of HRB in relation to earlier this year. Most recently, in September 2016, Gregory Macfarlane, the CFO of HRB bought 4,618 shares for a total of $99,980.

H&R Block, Inc. provides tax preparation and banking services. Through its subsidiaries, it offers assisted and do-it-yourself (DIY) tax return preparation through multiple channels (including in-person, online and mobile applications, and desktop software) and distribute the H&R Block-branded financial products and services of BofI. The company was founded by Henry W. Bloch and Richard L. Bloch on January 25, 1955 and is headquartered in Kansas City, MO.