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Investing.com -- Scotiabank upgraded Intuit Inc (NASDAQ:INTU). to Sector Outperform with a $700 price target, given the growing momentum in company’s tax and small business segments, as well as expanding potential for AI-driven monetization.
Since February 18, 2024, Intuit has risen 1% while the iShares Expanded Tech-Software Sector ETF, a benchmark for software stocks, has dropped 19%.
“INTU has been the top performer in our coverage since the 2/18 drawdown… and we believe this is just the beginning,” analysts wrote in a note.
The firm pointed to likely shutdown of the IRS Direct File program, positioning Intuit’s TurboTax Live to gain further share in the $35 billion assisted tax market.
Scotiabank (TSX:BNS) expects more than 8% revenue growth in Intuit’s Consumer segment in fiscal 2025, driven by another year of 17% TurboTax Live growth and improving average revenue per return.
In the Global Business Solutions Group, the firm sees room for upside, especially as desktop products outperform on pricing strength across accounting, payroll, and payments.
On AI, the firm sees “a step function change in optimism” around Intuit Assist. Analysts said new capabilities like automated document-to-invoice conversion and background accounting are driving 50%+ increases in engagement, which could support both pricing increases and standalone AI product revenue.
For fiscal Q3, Scotiabank models revenue of $7.705 billion, a 14% jump on a year over year basis and non-GAAP EPS of $11.40, implying $0.48 upside to guidance.
It sees full-year FY25 revenue of $18.806 billion and EPS of $19.98, both ahead of consensus.
With shares trading at 29x next-twelve-months earnings, below recent averages, Scotiabank said its $700 price target, based on 30x CY26 earnings, is supported by a PEG ratio of 2.0.