Valued at a market cap of $164.4 billion, Intuit Inc. (INTU) is a financial software company that develops and sells financial, accounting, and tax preparation software and related services for small businesses, consumers, and accounting professionals. The Mountain View, California-based company’s offerings include QuickBooks financial and business-management online services, payroll solutions, merchant payment-processing solutions, and financing for small businesses.
Shares of this financial software giant have significantly lagged behind the broader market over the past 52 weeks. Intuit has declined 11.6% over this time frame, while the broader S&P 500 Index ($SPX) has soared 22.5%. Moreover, on a YTD basis, the stock is down 7.7%, compared to SPX’s 4.2% rise.
Narrowing the focus, Intuit’s underperformance looks even more pronounced when compared to the Technology Select Sector SPDR Fund’s (XLK) 19.5% return over the past 52 weeks and nearly 4.2% gain on a YTD basis.
Intuit released its Q1 earnings results on Nov. 21, and INTU's shares fell 5.7% the following day despite delivering notably better-than-expected Q1 adjusted earnings of $2.50 per share and revenues of $3.3 billion. Moreover, the bottom line advanced 1.2% from the year-ago quarter, while the top line improved 10.1% year-over-year.
However, what disappointed investors the most was INTU’s Q2 forecast, which came below analysts’ expectations. Moreover, a massive 17% decline in its Desktop Ecosystem revenues, stemming from strategic changes to desktop offerings implemented in early fiscal 2024, somewhat affected its otherwise strong performance and might have further dampened investor confidence.
For the current fiscal year, ending in July, analysts expect Intuit’s EPS to grow 21.4% year over year to $14.09. The company’s earnings surprise history is promising. It surpassed the Wall Street estimates in each of the last four quarters.
Among the 28 analysts covering the stock, the consensus rating is a “Strong Buy,” which is based on 21 “Strong Buy,” one “Moderate Buy,” five “Hold,” and one “Strong Sell” rating.
On Nov. 23, Morgan Stanley maintained an “Equal-Weight” rating on Intuit and raised its price target to $730, which indicates a 25.9% potential upside from the current levels.
The mean price target of $734.62 represents a 26.7% upside from Intuit’s current price levels, while the Street-high price target of $800 suggests an upside potential of 37.9%.
On the date of publication, Neharika Jain did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.More news from Barchart
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