Things have been going very well for Mountain View headquartered
Intuit (NASDAQ: INTU) in recent months. The
financial software company, known for its TurboTax, Mint, and Quickbooks products has put in a solid shift after taking a short-lived but brutal haircut in Q1.
Shares fell close to 40% in a matter of weeks but were able to rally close to 100% through August. They cooled off through the first half of September but look set to finish the year out strong as we head into Q4. It’s been a remarkable recovery for many of these high flying tech names, who not only have undone the damage of Q1 but have been able to drive on to all time highs.
Intuit’s fiscal Q4 earnings at the end of August showed investors just how they’ve been able to do that. Revenue was up a staggering 80% year on year while EPS was 130% higher than analysts expected. Not bad numbers for an $80 billion Silicon Valley behemoth to post.
Solid Momentum
In the weeks since then, the likes of Piper Sandler have come out bullish on the company with Overweight ratings on the stock. During September, they slapped a $351 price target on shares and spoke positively about the company’s diversified product offering, large customer base, and penchant for innovation helping to deliver “superior” revenue growth and margin expansion.
Mizhou and RBC have also thrown their lot behind the company in recent weeks, with the former moving shares to a Buy rating and the latter moving shares to Outperform. The common theme here was that the impressive growth seen in Intuit’s revenue from small businesses would allay investors' concerns about the coronavirus causing near-term headwinds. The company’s Consumer and Tax segment is also looking shiny, particularly as the number of people preparing DIY tax returns continues to grow.
In fact CEO Sasan Goodarzi spoke about this specifically in August’s earning report. At the time she told investors "we had an outstanding tax season, growing the Do-It-Yourself category overall as well as our share of total returns, while posting the strongest customer growth in four years. TurboTax Live had another great season, as we made significant progress in our effort to transform the assisted category."
All in all, it’s been nothing but good news out of Intuit HQ in recent weeks. And as we round the corner into the final quarter of the year, it doesn’t look like anything is going to change.
Fresh Upgrades
On Monday of this week, the folks over at Morgan Stanley joined their peers when they upgraded Intuit shares to Overweight from Equal-Weight. They went one better with a price target of $400 which implies upside of more than 20% from Monday’s closing price. Analyst Keith Weiss spoke to the company’s recent investor day which focused more on customer expansion than customer acquisition. Management’s focus on growing revenue per customer ties in with Piper Sandler’s previous comments about favorable margins underpinning future revenue.
Investors getting involved at current prices have plenty to be excited about. Intuit’s revenue growth is close to triple digit percentage growth which belies the fact it’s a 37 year old company. Shares have hopped off the $300 mark so have good support there with August’s all time high providing a near term target of $360.
They’re coming out of the coronavirus pandemic in a much stronger position than they went into it with, which is more than a lot of companies can say, and have done nothing but become more attractive in the months since.
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