Intuit Inc. (NASDAQ: INTU) enjoys a leading market position in two sizeable segments, namely tax and small business, and has maintained double-digit organic revenue and operating margins above 30%. These strengths significantly outweigh near-term concerns, according to Wells Fargo.
The Intuit Analyst
Michael Turrin upgraded Intuit from Equal-Weight to Overweight, while raising the price target from $305 to $320.
The Intuit Thesis
Despite rising market uncertainty, Intuit is “among the most well-positioned in our coverage” to weather the current macro scenario, Turrin said .
He iterated four key reasons for the upgrade:
Certainty of taxes: The relative certainty brought by the option to file US taxes yourself is more favorable for Intuit in the first half of the year than for other end-markets in software.
U.S.-centric business exposure: International constitutes only around ~5% of Intuit’s overall revenue and the company has plenty of room for expansion in the U.S., which represents a market of over $150 billion.
Inbound model and virtual expertise: While Intuit’s software and cloud-enabled products allow customers to transact online, the recent addition of expert-enabled virtual offerings “also helps smartly connect business and individuals with a trusted network of remotely-based experts,” Turrin wrote in the note.
Valuation: Intuit has outperformed its annual earnings guidance by an average of 6% over the past five years. Continuing the trend this year would support better relative valuation for the company’s shares, the analyst said.
INTU Price Action
Shares of Intuit declined almost 3.76% to $259.52 at time of publication Wednesday.
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