Compass Point announced on Wednesday that they have downgraded tax preparation provider, H&R Block, Inc.(HRB) to “Neutral.”
The firm reported that they have downgraded HRB from a “Buy” to “Neutral,” but have increased the company’s price target from $18.50 to $19.50. This price target suggests a slight increase from the stock’s current price of $19.16.
An analyst from the firm commented, “we are downgrading our rating from Buy to Neutral as we believe the risk/reward on the stock is more balanced at the current level. Fundamentally, we believe the business has stabilized and see several potential tailwinds that should bolster earnings over the next several years. We continue to see value in the company, and are increasing our price target $1 to $19.50 as a result. That said, while we believe there is upside in the stock, the odds of a choppy tax season, the unknown resolution of the bank, and the potential for put-back headlines to re-emerge keep us from continuing to recommend shares at this level. We would be more constructive on shares at a lower level and believe this is broadly consistent with management’s actions as buyback activity has been focused on the sub $15 level over the past several years.”
H&R Block shares were mostly flat during premarket trading Wednesday. The stock is up 17.5% YTD.
The Bottom Line
Shares of H&R Block (HRB) have a 2.89% dividend yield, based on last night’s closing stock price of $19.19. The stock has technical support in the $17 price area. If the shares can firm up, we see overhead resistance around the $20-$22 price levels.
H&R Block, Inc.(HRB) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.1 out of 5 stars.
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