Wedbush Raises Price Target on H&R Block (HRB) Following Completion of Bank Disposition
Wedbush reiterated an Outperform rating on H&R Block (NYSE: HRB), and raised the price target to $46.00 (from $44.00), following the completion of Bank Disposition. In addition to the bank sale, company announced a modified Dutch auction tender offer commencing on 9/2 for $1.5 billion of stock with a new long-term buyback authorization of $3.5 billion.
Analyst Gil Luria commented, "We believe HRB will be able to deliver sustainable double-digit shareholder returns based on low single digit revenue growth, operating leverage, meaningful buy-backs and above-market dividend yield. With negligible macro and currency risk we see HRB as an ideal holding for current market conditions."
Luria also added, "Company announces closing of bank sale, paving the way for robust shareholder returns. In addition to the bank sale, company announced a modified Dutch auction tender offer commencing on 9/2 for $1.5 billion of stock with a new long-term buyback authorization of $3.5 billion. The company plans to add a committed line of credit and long term debt to finance the new shareholder return strategy. This exceeds our estimates for magnitude and cadence of share buybacks. While management has not commented on plans for the dividend, we expect the company to also raise the dividend in the future."
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Shares of H&R Block closed at $32.95 yesterday.