H&R Block (HRB) Rises Despite Lower Guidance On Buyout Hopes

Here is an intersting research note from today:

Soleil Securities upgrades H&R Block (NYSE: HRB) from Sell to Buy and raises its price target from $17 to $29 on private equity valuation and value Option One Mortgage at about $4/share.

Analyst Michael Millman of Millman Research said, "the decision to explore strategic alternatives could lead to a possible sale in whole or parts of the company." He also said, "We find it highly favorable for the shares that HRB is finally throwing in the towel, starting with its subprime mortgage business (albeit near the bottom)."

After the close yesterday, H&R Block announced it is evaluating strategic alternatives for Option One Mortgage Corp., including a possible sale or other transaction through the public markets. H&R Block also lowered its earnings guidance for fiscal 2007 to reflect continued pricing pressures in the mortgage market as well as lower-than-expected originations.

The stock is blowing-off the lowered guidance, rising over 7% in early action Tuesday.

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