Intuit share price decline represents a buying opportunity - Mizuho

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By Sam Boughedda

Mizuho analysts said the Intuit (NASDAQ:INTU) share price fall as a result of the negative read-through from Bill.com (NYSE:BILL) earnings appears to be an overreaction and presents a buying opportunity.

Intuit shares are down more than 2% so far on Monday.

Analysts who have a Buy rating and $650 price target on Intuit, explained in a research note that "INTU shares were down 6% on Friday along with BILL (down 27%) following a disappointing FQ2 and guidance from BILL."

"While we acknowledge that macro headwinds might be impacting SMBs, we view QuickBooks as mission-critical with payment representing only ~7% of revenues. At first glance, BILL's commentary on slowing payment volume growth and net customer adds due to a weaker macro appears to have negative read-through for INTU," the analysts stated. However, they also said that based on the firm's analysis of BILL's weakness and INTU's exposure, they believe the "recent sell-off in INTU shares is an overreaction from BILL read-through and presents a buying opportunity heading into INTU's FQ2 results on Feb 23." In a separate note looking at Intuit's fiscal second quarter, the analysts declared that the firm expects another strong quarter for the company.

"We expect Intuit to deliver a strong FQ2 given that current consensus expectations appear conservative across multiple segments," argue analysts. "For Small Business, we expect upside driven by FY23 price increases and continued momentum in online services with tailwinds from employment and growing attach rate of payments. For Tax, FQ2 consensus implies a slow start trend in January similar to last year, while we believe IRS filings will return to pre-COVID trends."