Shares of Intuit (NASDAQ:INTU)rose more than 4% in Wednesday's session after the company announced a broad set of price increases for QuickBooks that will kick in during F1Q25.
Reacting to the news, Jefferies analysts said they believe a recent price increase announcement by Intuit (INTU) for its QuickBooks products is a positive sign for the company's future revenue growth.
INTU flexing its pricing power in small businesses is likely a tailwind for FY25, says the Jefferies note. They reiterate a Buy rating for the stock and a $770 price target.
The price hikes, which will take effect in the first quarter of Intuit's fiscal 2025 (ending October 2024), apply to nearly all QuickBooks Online (QBO) and Desktop (QBD) products, including payroll services.
Jefferies sees this as a potential catalyst for higher revenue guidance in fiscal 2025.
"These [price hikes] should increase the likelihood that initial FY25 rev guide could exceed current consensus for 12.2% growth and potentially accelerate from FY24e's 12.7%," says the note.
Jefferies acknowledges that the desktop products remain cheaper than QBO but believes the price hikes are justified. They also expect the higher costs to encourage further migration to QBO.
Jefferies highlights the consistent growth of Intuit's Small Business segment, which has seen revenue rise 18% year-over-year for the past three quarters. The current analyst estimates for fiscal 2025 revenue growth are between 14.3% and 15.5%, which Jefferies believes could be on the low side given the recent price increases.
"These price increases could push FY25 higher," says the note. Jefferies' own forecast for total revenue growth in fiscal 2025 is 11.5%.
Overall, Jefferies believes Intuit is well-positioned for continued growth despite potential macroeconomic headwinds for small businesses. They point to the company's resilient tax and small business segments, its growing Live expert offerings, and its strong financials as reasons for optimism.