Case Study: Intuit (INTU) stock according to high performing analysts
Key Points
Performance
Intuit shares fell by 6.37% this week, pushing their year-to-date gains down to 6.97%. This compares poorly to both the S&P 500 and the Nasdaq Composite Index, which are up by 9.97% and 24.92%, respectively, on a year-to-date basis.
Event & Impact
Intuit posted its fiscal 2023 third quarter results this week, missing consensus estimates on the top-line but beating them on the bottom-line. During Q3, INTU’s revenue totaled $6.02 billion, missing Wall Street’s consensus estimate by $70 million. Intuit’s Q3 non-GAAP earnings-per-share came in at $8.92, which was $0.43/share above consensus estimates
Noteworthy News:
Q3 is Intuit’s biggest quarter of the year, by far, due to tax season’s positive impact on its TurboTax brand. The company posted year-over-year growth on both the top and bottom lines during Q3; however, its sales figure fell short of analyst estimates. Furthermore, Intuit’s Q4 guidance came in lower than Wall Street’s expectations on the top-line as well. This caused shares to dip during the week even though management raised its full-year EPS guidance figures (on the back on the strong Q3 beat).
Nobias Insights
59% of recent articles published by credible authors focused on INTU shares offer a “bullish” bias. 4 out of the 5 credible Wall Street analysts who cover Intuit believe that shares are likely to rise in value. The average price target being applied to INTU by these credible analysts is $472.20, which implies an upside potential of approximately 12.85% relative to the stock’s current share price of $418.43.
Bullish Take Angela Harmantas, a Nobias 4-star rated author, said, “Despite these variations, Intuit raised its guidance for the full fiscal year 2023, expecting higher revenue and operating income growth than previously projected on the strength of its Small Business unit.”
Bearish Take Brody Ford, a Nobias 4-star rated author, stated, “The decrease in the expected number of tax filers “equates to approximately $200 million of negative impact to revenue per TurboTax, versus our original expectations,” Chief Executive Officer Sasan Goodarzi said on a conference call after the results,”
INTU May 2023
Intuit (INTU), a financial services software provider that owns notable brands such as TurboTax, QuickBooks, Mint, and Credit Karma, posted its fiscal 2023 third quarter earnings results this week. This is the company’s largest and most significant quarter of the year because it includes tax season.
Investors who follow this company eagerly await the Q3 results each year because of how heavily weighted the statistics are (relative to the company’s full-year results). For instance, last year during fiscal 2022, Intuit’s Q3 results accounted for approximately 59.8% of its full-year earnings. When Intuit reported results on May 23, 2023, its results were mixed.
Furthermore, the company’s Q4 guidance came in below Wall Street’s expectations. These disappointing results caused shares to fall by 6.37% this week, pushing INTU’s year-to-date gains down to 6.97%. This means that INTU shares are now underperforming the S&P 500 on the year; that major average is now up by 9.97% during 2023 thus far. Yet, even with this week’s sell-off and Intuit’s near-term underperformance in mind, the majority of both the credible author and credible analysts communities remain bullish on INTU shares moving forward.
Bullish Nobias Credible Analysts’ Opinions:
Patrick Seitz, a Nobias 4-star rated author, covered the company’s third quarter earnings report in an article that he published this week at Investors.com. Looking at the company’s top and bottom-line results, Seitz said, “The Mountain View, Calif.-based company late Tuesday said it earned an adjusted $8.92 a share on sales of $6.02 billion in the quarter ended April 30.” “Analysts polled by FactSet had expected earnings of $8.48 a share on sales of $6.09 billion,” he added, noting that the company beat Wall Street’s expectations on the bottom-line during Q3, but missed on the top-line.
Despite the mixed results, Seitz points out that Intuit continues to post reliable year-over-year growth. He said, “On a year-over-year basis, Intuit earnings rose 17% while sales climbed 7%.” Looking ahead, Seitz touched upon management’s Q4 guidance, stating, “For the quarter ending July 31, Intuit predicted earnings of an adjusted $1.46 a share on sales of $2.64 billion. That's based on the midpoint of its outlook. Wall Street called for earnings of $1.50 a share on sales of $2.45 billion in the fiscal fourth quarter.”
Angela Harmantas, a Nobias 4-star rated author, also published an overview of Intuit’s earnings this week. In her article at Proactive Investor, Harmantas wrote that despite the disappointing Q4 guide, INTU’s strong Q3 earnings-per-share beat is allowing management to raise its full-year earnings guidance.
“Despite these variations,” she said, “Intuit raised its guidance for the full fiscal year 2023, expecting higher revenue and operating income growth than previously projected on the strength of its Small Business unit.” “The firm is expecting full year 2023 revenue of $14.279 billion to $14.317 billion, and earnings per share of $14.20 to $14.25,” Harmantas continued.
Bearish Nobias Credible Analysts Opinions:
Looking at the disappointing Q4 guidance, Brody Ford, a Nobias 4-star rated author, published an article titled, “Intuit Drops After Tax Season Sales Fall Short of Estimates” at Yahoo Finance this week. In that piece, Ford wrote, “Intuit said the number of federal tax returns will decline about 2% by the end of the fiscal year and the market share among customers doing their own taxes will fall about three-quarters of a point.”
“The decrease in the expected number of tax filers “equates to approximately $200 million of negative impact to revenue per TurboTax, versus our original expectations,” Chief Executive Officer Sasan Goodarzi said on a conference call after the results,” he added.
However, Ford noted that like so many other technology-enabled service companies in the market today, Intuit is trying to latch onto the disruptive artificial intelligent (AI) trend that has driven stocks higher in recent weeks.
Ford wrote, “Intuit’s has been steering users toward a live, full-service version of the TurboTax service this year, in an attempt to compete with traditional accountants. “Our future is TurboTax live,” Goodarzi said. “Especially with AI capability, we can really disrupt the assisted segment.”’ He continued, “Goodarzi added that TurboTax already uses artificial intelligence to communicate with customers. The company had about 740 million digital interactions with customers this year, including through automated chat bots, compared with 24 million human interactions”, he said.
Nobias Credible Analysts
Currently, with its recent Q3 results being taken into account, the current consensus estimate for INTU’s full-year EPS results is $14.22 (according to FactSet Research). That estimate represents 20% EPS growth on a year-over-year basis which would mark the company’s 8th consecutive year of positive earnings growth should management hit the mid-point of its recently full-year estimate.
If Intuit is able to post positive earnings growth during fiscal 2023, it would be the 19th year out of the last 20 that Intuit has posted full-year EPS growth. It’s this strong full-year growth outlook that inspired Nobias 4-star rated analyst, Brad Stills, who covers Intuit for Bank of America, to raise his price target on INTU shares.
Nicholas Ward is a Senior Investment Analyst at Wide Moat Research. He has spent the last 8 years writing about the stock market at various publications, including Seeking Alpha, The Street, Forbes Real Estate Investor, Sure Dividend, The Dividend Kings, iREIT, Safe High Yield, and The Intelligent Dividend Investor.
According to the Fly on the Wall, “BofA raised the firm's price target on Intuit to $500 from $485 and keeps a Buy rating on the shares after the company reported "healthy" Q3 results and raised its FY23 outlook. Meaningful Quickbooks upside offset lighter Consumer tax revenue from lower-than-expected tax filings, the analyst noted.”
Stills isn’t alone with this bullish outlook.
Overall bias of Nobias Credible Analysts and Bloggers:
Right now, 4 out of the 5 credible Wall Street analysts tracked by the Nobias algorithm who have offered opinions on INTU shares believe that they’re likely to increase in value. The credible author community that Nobias tracks agrees. 59% of recent articles published by these credible individuals on Intuit expressed a “bullish” bias towards the stock.
Currently, the average price target among the credible Wall Street analysts who cover INTU is $472.20. Intuit shares closed the week trading for $418.43, meaning that this credible analyst average price target implies upside potential of approximately 12.85%.
Disclosure: Nicholas Ward has no INTU position. Nicholas Ward wrote this article for Nobias at their request with the intention of giving investors a balanced perspective based on the writings of Nobias highly rated analysts and bloggers. Nobias has no business relationship with any company whose stock is mentioned in this article and does not have a position in this stock.
Additional disclosure: All content is published and provided as an information source for investors capable of making their own investment decisions. None of the information offered should be construed to be advice or a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. The information offered is impersonal and not tailored to the investment needs of any specific person.
Disclaimer: The Nobias star rating is based on past performance results and is not an indicator of future results. These past performance returns do not represent returns that any investor actually earned. Assumptions made include the ability to purchase the stocks recommended by the author under liquid markets where the transaction would be at the market price for the day. In reality, loss in liquidity may have a material impact on the returns that actually may have been earned. Further, returns are calculated without any including transaction costs, management fees, performance fees or expenses, or reinvestment of dividends and other income. This information is provided for illustrative purposes only.