Morgan Stanley raised its estimates and price target on H&R Block (HRB).
The tax preparer and financial-services firm posted 6 cents second-quarter earnings per share, vs. a 21 cents loss. Analyst Chris Gutek sees the results as another incremental positive for the company. He thinks tax-law changes will significantly help fiscal 2004 (Apr.) volume growth and franchise repurchases.
Gutek notes the Wal-Mart Stores partnership should also be a positive for H&R Block's long-term earnings per share. In September H&R Block signed a deal to offer tax preparation in 850 Wal-Mart stores starting Jan. 15, 2004. He thinks H&R Block is under-managed historically, and sees room for more professional management techniques. Gutek expects one of three CFO candidates to be selected next month, which is also a positive.
He raised the $3.62 fiscal 2004 (Apr.) earnings per share estimate to $3.68 and upped the $3.93 fiscal 2005 estimate to $4.12. Gutek also upped the $52 target to $54, and maintains the overweight rating.