H&R Block's Q4 Print Keeps Morgan Stanley Sidelined: 'A Lost Tax Season'

H & R Block Inc’s HRB fiscal fourth-quarter results support the expectation of 2020 being “a lost tax season,” according to Morgan Stanley.

The H&R Block Analyst: Jeffrey Goldstein maintained an Equal-Weight rating for H & R Block with a $16 price target.

The H&R Block Thesis: H&R Block’s results are being adversely impacted by the accelerated shift away from assisted filings due to regulatory and safety concerns around covid-19, Goldstein said in a Wednesday note. 

H&R Block’s share gains in the assisted market earlier in the season had moderated, which means that the company’s assisted filings experienced a steeper decline than the industry data of a 15% drop, the analyst said. 

While suggesting that assisted volumes could increase going forward, H&R Block refrained from providing any full-year guidance, citing ongoing uncertainty, he said. 

“While we knew based on the pandemic environment and IRS data that industry volumes were challenged, we would have liked to see better performance relative to the market,” Goldstein said. 

H&R Block’s performance in the do-it-yourself space was in-line with industry data showing a 4% decline, the analyst said.

The shift to DIY may be “a more permanent step down,” as it is a lower-cost offering, he said. 

HRB Price Action: Shares of H & R Block were down 9.48% at $16.32 at the close Wednesday. 

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