Analysts Voice Cautious Optimism On Intuit Following Q2 Earnings

Analysts Voice Cautious Optimism On Intuit Following Q2 Earnings

Shares of Intuit Inc. INTU were losing ground Thursday after the Mountain View, California-based software company reported a year-over-year revenue decline in its fiscal Q2 earnings.

Intuit's Numbers: Intuit posted $1.5 billion in second-quarter revenue, down 7% year-over-year.

The company’s Small Business and Self-Employed Group saw its revenue rise 11% year-over-year to $1.1 billion as its Online Ecosystem revenue swelled by 22% to $644 million. Revenue from Credit Karma totaled $144 million since the acquisition closed on Dec. 3.

However, second-quarter revenue from the company’s Consumer Group sank by 71% to $147 million, which Intuit attributed by IRS’ later opening, Feb. 12, versus the previous year, Jan.27.

Intuit Analysts React: Piper Sandler senior research analyst Arvind Ramnani praised the company for “good results across revenue and margins” and predicted a positive 2021 if it maintained its strategic course.

“We would buy INTU on near term weakness as we see upside to FY21 estimates given underlying dynamics in the business, including: increased volume and ARPU in tax filings (driven by retail equity and crypto trading), potential lift in pricing as QB comps get easier, Credit Karma acceleration, and an SMB rebound/reopening,” Ramnani wrote. “However, we note that a fluid macro and slow ramp in hiring could offset some of this upside in the near term.”

Credit Suisse analyst Brad Zelnick highlighted a “surprisingly strong” performance by Credit Karma and noted that “most QuickBooks indicators are back to or better than pre-pandemic levels.” He also noted that while the company’s SMB focus was improving, a “full scale recovery remains elusive.”

On the whole, Zelnick maintained a cautious optimism.

“Guidance for SMB remains unchanged for 9-10% growth for the year despite a strong 1H,” he wrote. "While 4Q2020 benefited from some one-time effects of PPP (est. $30m rev) which would result in tougher comps, we still struggle to fully reconcile the full year guide versus positive comments around SMB health.”

INTU Ratings, Price Targets: Ramnani maintained an Overweight rating and raised the price target from $399.09 to $470.

Zelnick maintained an Outperform rating and maintained the price target at $460.

INTU Price Action: Intuit shares were down 4.86% at $393.08 at last check Thursday.

(Photo by Christin Hume on Unsplash)

Posted In: Arvind RamnaniBrad ZelnickCredit KarmaCredit SuissePiper SandlerAnalyst ColorEarningsFintechNewsPrice TargetAnalyst Ratings

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