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Deutsche Remains Bullish On Intuit Despite Market's Reaction To Q3 Results, Guidance

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Deutsche Remains Bullish On Intuit Despite Market's Reaction To Q3 Results, Guidance

Intuit Inc. (NASDAQ: INTU) shares are down 3.2 percent in Wednesday’s session after the company reported revenue and earnings beats in fiscal Q3. Instead, the market seems to be focusing on managements cautious guidance for the rest of the year, including full-year Quick Books Online (QBO) subscription guidance of 1.45-1.5 million.

Deutsche Bank analyst Nandan Amladi believes traders are overreacting to the guidance, and investors should pounce on the buying opportunity.

“We tweak our ests for updated guidance and reiterate our Buy rating and $125 PT based on a C17E FCF of $5.53/sh (unch) and 1.5x EV/uFCF/G, above large-cap software due to superior competitive positioning and increasing recurring revenue,” Amladi explained.

Related Link: It's Been A Year Since The S&P 500 Hit New Highs: Good News Or Bad News?

Looking Forward

Amladi sees product innovation and a growing market as keys to Intuit's continued success.

TurboTax gained roughly 3.0 percent market share in Q3 and now holds nearly two-thirds (65 percent) of overall share. Management highlighted 20 new features and enhancements added to the software in Q1, and Amladi believes that this type of innovation will continue to make Intuit the name to beat in the space.

QBO Q3 subscriptions grew 45 percent year-over-year, including 60 percent growth in the international segment.

Intuit’s stock is up 7.0 percent in 2016, and Amladi believes management will continue to execute and achieve its reasonable guidance targets.

Disclosure: The author holds no position in the stocks mentioned.

Latest Ratings for INTU

DateFirmActionFromTo
Nov 2020Credit SuisseMaintainsOutperform
Nov 2020Morgan StanleyMaintainsOverweight
Nov 2020Piper SandlerMaintainsOverweight

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