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On Wednesday, BofA Securities updated their outlook on Intuit (NASDAQ:INTU), reducing the price target from $780.00 to $740.00, while reaffirming their Buy rating on the stock. The adjustment reflects a recalibration due to a contraction in multiples across the sector and a dip in free cash flow, albeit from previously high levels. According to InvestingPro data, Intuit currently trades at a P/E ratio of 53.56x, with analyst targets ranging from $530 to $800, suggesting mixed views on the stock’s valuation.
The BofA Securities analyst highlighted Intuit’s strategic progress, noting the company’s successful efforts to elevate its QuickBooks and TurboTax franchises to appeal to a more upscale market segment. The strategy appears to be working, with InvestingPro data showing impressive gross profit margins of 79.61% and revenue growth of 12.48% over the last twelve months. Although it is premature to draw conclusions about the current tax season, the analyst expressed optimism that recent changes could lead to positive outcomes by the season’s end.
The revised price objective of $740.00 is anchored in a 28 times multiple on the calendar year 2026 estimated free cash flow, a decrease from the earlier 30 times multiple. This valuation also incorporates an adjustment for a projected 15% compound annual growth rate over two years. The analyst justifies the premium valuation relative to the large-cap peer group by citing Intuit’s sustained growth potential within substantial total addressable markets.
Intuit is well recognized for providing critical financial management and compliance tools to small businesses and consumers through its popular QuickBooks and TurboTax software. These products have helped the company secure a dominant position in the market.
The new price target of $740.00 follows a comprehensive analysis of Intuit’s financial performance and market position, with the company’s robust growth trajectory being a key factor in maintaining the Buy rating despite the reduced price target. With a market capitalization of $155.65 billion, Intuit remains a dominant player in the software industry. InvestingPro subscribers can access 15+ additional exclusive insights and a comprehensive Pro Research Report, offering deep-dive analysis of Intuit’s valuation metrics, growth prospects, and competitive position.
In other recent news, Intuit reported impressive second-quarter fiscal year 2025 earnings, surpassing market expectations with an earnings per share (EPS) of $3.32, well above the forecasted $2.58. The company’s revenue reached $4 billion, exceeding the anticipated $3.83 billion, marking a 17% year-over-year increase. Following these results, Morgan Stanley (NYSE:MS) upgraded Intuit’s stock rating to Overweight and raised the price target to $730, citing confidence in the company’s growth prospects and the strength of its small business segment. Concurrently, Evercore ISI adjusted Intuit’s price target to $700 while maintaining an Outperform rating, highlighting the company’s solid performance and ongoing initiatives within the QuickBooks Online ecosystem.
Intuit’s strategic focus on AI-driven solutions and small business market expansion has contributed to its robust performance, particularly in its QuickBooks and TurboTax platforms. The company’s recent launch of new AI-driven products aims to enhance customer experience further. Despite a challenging year for Intuit’s stock, analysts like Evercore ISI’s Kirk Materne express optimism about the company’s underlying trends and potential for future growth. Intuit also reiterated its full-year guidance, projecting a 12-13% growth in total company revenue and a 28-30% increase in GAAP operating income.
Overall, Intuit’s recent developments have drawn positive attention from analysts, with both Evercore ISI and Morgan Stanley acknowledging the company’s strategic initiatives and growth potential.
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