- About 80% of Intuit’s revenues are generated by recurring subscriptions.
- The company’s market leadership position will be beneficial as tax regulations become more complex.
- A new wave of value and momentum stocks could be setting up for major moves—and Tim Melvin will name them live this Wednesday. Secure access here.
Intuit Inc INTU successfully transitioned to a subscription-based model while also showing additional upside from generative artificial intelligence (AI).
The Intuit Analyst: RBC Capital Markets’ Rishi Jaluria initiated coverage of Intuit with an Outperform rating and price target of $760.
The Intuit Thesis: Around 80% of Intuit’s revenue is generated by recurring subscriptions. The company has achieved "greater platform expansion," Jaluria said in the initiation note.
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Platform revenues now represent 77% of Intuit's total revenues, versus 53% five years ago and the mix-shift in favor of subscription and cloud would drive "better unique economics," he added.
Intuit enjoys a market leadership position in tax and accounting software, which should be a tailwind as "tax codes and regulations become increasingly complex," the analyst wrote.
Tax preparation and SMB accounting are "very services-heavy industries,” Jaluria says. GenAI gives Intuit's customers the ability to automate and generate cost savings.
He added that the company's non-GAAP and GAAP operating margins could reach around 40% and 30%, respectively, in fiscal 2026.
INTU Price Action: Shares of Intuit had risen by 0.66% to $660.52 at the time of publication on Wednesday.
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