UPDATE 2-Jackson Hewitt soars on CEO appointment
(Recasts; adds analysts' comments, details, updates stock activity)
By Anurag Kotoky
BANGALORE, June 5 (Reuters) - Shares of Jackson Hewitt Tax Service Inc JTX.N soared as much as 47 percent Friday, a day after the tax preparer appointed Harry Buckley, former head of bigger rival H&R Block Inc (HRB.N: Quotazione), as its chief executive and engaged Goldman Sachs to examine strategic alternatives.
"The hiring of an investment bank to pursue strategic alternatives creates a call option over the coming months that a transaction could be announced," Oppenheimer & Co analyst Scott Schneeberger said in a note.
He upgraded the No. 2 U.S. tax preparer's stock to "outperform" from "perform."
While a change in management had been anticipated, Schneeberger said his checks with franchisees showed an encouraging boost to morale.
"Most important is the newly introduced potential for renewed hope in Jackson Hewitt's franchisee base with 'a proven tax guy' at the helm," he said. He set a $7.50 target on the stock.
Stephens Inc analyst David Burtzlaff told Reuters that Buckley's appointment was a positive move by the company, which would give it a better chance to turn around. He has an "equal weight" rating on the stock.
Oppenheimer's Schneeberger said the U.S. tax regulator's announcement on Thursday of pending increased regulation of the industry was good news for tax preparation companies. Continua...