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Mizuho reiterates Outperform on Intuit stock, sees revenue shift driving stronger Q3 results

EditorAhmed Abdulazez Abdulkadir
Published 11/25/2024, 09:20 PM
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On Monday, Mizuho (NYSE:MFG) maintained its Outperform rating on Intuit (NASDAQ:INTU) and increased the price target to $750 from the previous $725. This adjustment follows Intuit's robust first fiscal quarter results, despite a downturn in share prices last Friday. The decline was attributed to concerns over a softer second-quarter forecast and the reiteration of the fiscal year 2025 guidance.

Intuit's second-quarter guidance was slightly below market expectations, which Mizuho attributes to a strategic shift in revenue from the second to the third quarter, rather than an actual revenue loss. This shift is due to the timing of promotions for Desktop TurboTax. Mizuho also pointed out that Intuit traditionally does not update its full-year guidance until the third fiscal quarter.

The first-quarter results were notably strong, with an unexpected boost from CreditKarma. In light of these outcomes, Mizuho suggests that the recent sell-off in Intuit's shares is unjustified and recommends purchasing shares during this period of weakness. The firm anticipates further growth potential for Intuit in the fiscal year 2025, driven by QuickBooks' move upmarket and continued double-digit growth in the Consumer segment.

The new price target of $750 implies a next twelve months enterprise value to free cash flow (EV/FCF) multiple of 34x, which marks an increase from the current 29x. Mizuho's analysis indicates confidence in Intuit's future performance and the company's ability to navigate through the temporary shifts in its quarterly earnings.

In other recent news, Intuit, a financial software company, has reported first-quarter revenues of $3.28 billion, surpassing expectations by approximately $144 million. The company also reported earnings per share (EPS) at $2.50, which is $0.14 higher than anticipated. This performance was largely driven by a 20% increase in its Global Business Services (GBS) Online Ecosystem and a 29% rise in Credit Karma, a part of Intuit's portfolio. Despite these strong results, Piper Sandler has slightly adjusted the price target for Intuit to $765 from the previous $768, while maintaining an Overweight rating on the stock.

The company's recent developments also include a strategic transformation, with a focus on simplifying financial tasks to attract new users. CEO Sasan Gadarzi and CFO Sandeep Ojala highlighted the transformative impact of AI and the company's progress in serving mid-market and small business customers. However, a decline in desktop revenue was also noted during this period.

While Intuit's stock has seen a 5% decrease, this is largely due to the company's decision to maintain its full-year guidance without adjustments and potential challenges to its TurboTax product from the new administration's initiative to simplify tax filings. Piper Sandler's analysis indicates potential external risks, but reaffirms an Overweight rating for Intuit's stock, reflecting the company's strong start to the fiscal year 2025.

InvestingPro Insights

Intuit's strong market position and financial performance are further highlighted by recent data from InvestingPro. The company boasts a substantial market capitalization of $179.26 billion, reflecting its significant presence in the software industry. Intuit's impressive gross profit margin of 79.61% for the last twelve months as of Q1 2025 underscores its operational efficiency and pricing power.

InvestingPro Tips reveal that Intuit has raised its dividend for 14 consecutive years, demonstrating a commitment to shareholder returns. This aligns with Mizuho's positive outlook on the company's future performance. Additionally, Intuit's revenue growth of 12.48% over the last twelve months supports the analyst's expectation of continued growth potential, particularly in the QuickBooks and Consumer segments.

It's worth noting that while Intuit trades at a high P/E ratio of 66.02, this valuation should be considered in the context of its strong market position and growth prospects. Investors seeking more comprehensive analysis can find 13 additional InvestingPro Tips, offering deeper insights into Intuit's financial health and market performance.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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