RBC Previews Intuit's Consumer Tax Season

Intuit Inc. INTU is scheduled to report tax season results around April 24. In a recent report, RBC Capital Markets analysts Ross MacMillan and Matthew Hedberg provide a preview for the company’s consumer tax business, which they expect to be in-line with their expectations.

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The specialists anticipate growth of 5 percent this season. “Despite the concerns from desktop pricing changes and state file fraud early in the season, [they] think IRS data is supportive of 5% of e-file self-prepared filing growth and that Intuit's price actions could potentially drive upside.”

Consequently, RBC reiterated an Outperform rating and a $105 price target on Intuit.

Breaking Down Some Key Points

The expectation of in-line consumer tax revenues is based on: “i) IRS filing data season to date; ii) pricing action by Intuit on core online products; and iii) a relatively benign impact from ACA on total filings this season.”

IRS data supports the firm’s view: “weekly filing data indicates that individual self-preparation e-file receipt growth was 4.5% through 04/04/15.”

The fact that Intuit increased the prices of online products by an average of $5 in January likely helped drive revenue growth too. However, “the key question is whether this change had a material impact on share as H & R Block Inc HRB did not match Intuit’s higher prices this year.”

“ACA proved to be less of an issue than feared: We [the analysts at RBC] believe that the impact from the additional filing burden for those eligible for ACA has been relatively benign this tax season.”