H&R Block Inc.'s stock slumped 3.9% in active afternoon trade Wednesday, making it the biggest decliner among S&P 500 components, after the tax preparer was downgraded by Credit Suisse on concerns over valuation and uncertainty over potential catalysts. Volume as of 2 p.m. Eastern was about 3.4 million shares, well above the full-day average of 2.4 million shares, according to FactSet. Analyst Anjaneya Singh cut his rating to neutral from outperform, and lowered the stock price target to $35 from $37. The downgrade comes a day after the stock gained 2.2% on the heels fiscal 2015 results. Singh believes the potential for capital returns, given the the company has about $1 billion in excess capital, is already reflected in the share price. Singh also said the timing and materiality of the lift from the tax-related complexities of Affordable Care Act, is uncertain. Singh wrote in a note to clients that the ACA benefit "is not immaterial, but it is not enough to get excited about it in our view, especially if it takes 3-5 years to materialize at these levels." The stock has dropped 8.9% year to date, while the S&P 500 has gained 2.3%.
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