Barrington Research lowers H&R Block (HRB ) to market perform from outperform.
Analyst Alex Paris says he downgraded given the stock's strong performance over the past six months, as shares approached his $60 target at Tuesday's close. He thinks this is going to be a tougher tax season, given the difficult economy and employment situation. He notes the Internal Revenue Service is expecting a 0.5% growth in returns filed this year.
Paris expects the mortgage business to hold its own in a rising interest-rate environment (management continues to expect origination growth), and thinks higher rates will negatively impact its profitability despite being factored into managements and his own estimates. Paris upped the $3.75 fiscal 2004 (Apr.) earnings per share estimate to $3.85.