On Thursday, Scotiabank (TSX:BNS) analyst Allan Verkhovski adjusted the price target on Intuit (NASDAQ:INTU) shares, reducing it to $600 from the previous $700, while keeping the Sector Perform rating steady. The revision followed Intuit’s announcement of robust earnings that surpassed expectations, particularly in the bottom line, which resulted in a 6% increase in after-hours trading. According to InvestingPro data, Intuit currently trades near its Fair Value, with a market capitalization of $175 billion and impressive gross profit margins of nearly 80%.
Intuit’s Consumer Group revenue outperformed forecasts despite a slow initiation of the tax season. The company’s lesser-than-anticipated impact from the change in TurboTax Desktop promotions contributed to this success. TurboTax has seen a strong start this year, with unit sales and average revenue per user (ARPR) on the rise due to greater customer engagement with professional advice and additional services. This performance has mitigated worries regarding potential market share losses in the tax segment. InvestingPro analysis shows Intuit maintains strong financial health with a ’GOOD’ overall score, supported by revenue growth of ~14% in the last twelve months.
In addition to consumer tax products, Intuit’s Online Ecosystem revenue saw an acceleration, growing by 21%. Furthermore, Online Services revenue expanded by 19%, aligning with first-quarter growth rates and reaching 30% after adjusting for Mailchimp’s estimated growth at around 2% year-over-year. The leadership change at Mailchimp, with Matt Idema coming on board from Meta (NASDAQ:META) to replace Rania Succar, has been positively received by management. As an InvestingPro Tip reveals, Intuit is a prominent player in the Software (ETR:SOWGn) industry, with 14 consecutive years of dividend increases and moderate debt levels. Subscribers can access 15+ additional ProTips and comprehensive financial metrics.
Analysts also noted Intuit’s effective use of artificial intelligence investments, which have led to approximately $90 million in annualized efficiencies within the first half of the year. This strategic utilization of AI played a significant role in the company’s earnings per share (EPS) exceeding projections by 28% for the quarter. These developments have provided analysts with a renewed sense of confidence in Intuit’s prospects for the second half of the fiscal year. The updated $600 price target reflects a valuation based on 26 times the projected 2026 earnings per share (P/E), with current P/E ratio standing at 60x and analysts forecasting EPS of $19.57 for fiscal year 2025.
In other recent news, Intuit has reported strong financial results for the second quarter, with revenues reaching $3.96 billion, surpassing forecasts by approximately $120 million. The company’s earnings per share (EPS) were $3.32, exceeding expectations by $0.75. Intuit also saw a 21% increase in its Global Business Services Online Ecosystem and a 36% growth in Credit Karma. Analysts have adjusted their price targets for Intuit, with Piper Sandler raising it to $785 while maintaining an Overweight rating, and BMO (TSX:BMO) Capital Markets lowering it to $714 but keeping an Outperform rating. Stifel reiterated a Buy rating with a price target of $725, emphasizing Intuit’s potential for durable double-digit growth. BofA Securities also maintained a Buy rating, albeit with a reduced price target of $740, citing a recalibration due to sector-wide changes. Evercore ISI decreased their price target to $700 while maintaining an Outperform rating, noting optimism about the current tax season and the QuickBooks Online ecosystem. These developments reflect Intuit’s strong performance and strategic initiatives, with analysts showing confidence in the company’s growth trajectory despite some adjustments in price targets.
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