Shares of H&R Block Inc. tumbled 6.9% in afternoon trade Wednesday, after the tax preparer was downgraded at Morgan Stanley, which cited the potential headwinds associated with President-elect Donald Trump's policies and the company's "Refund Advance" plan. Analyst Thomas Allen cut his rating to equal weight, after being at overweight the last three years, and trimmed his stock price target to $25 from $26. He said he was "puzzled" that the stock (HRB) had run up 12% the past four sessions, as he believes a simplified tax code and the repeal of the Affordable Care Act, which were cornerstones of Trump's candidacy, would remove an industry tailwind. "We see a Trump presidency as an incremental negative to HRB and the broader tax prep industry," Allen wrote in a note to clients. He also said his research suggests that while the Refund Advance program--a loan product for early-season filers to get their refunds quickly--can provide a near-term tailwind, it is likely to eventually weigh on margins. The stock has tumbled 33% year to date, while the S&P 500 has gained 6.5%.
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