Intuit shares were falling early on Wednesday after the company’s sales from its TurboTax software took a hit. Wall Street analysts reckon investors should look past that and focus on its raised guidance.
Intuit
(ticker: INTU), which also owns QuickBooks, Credit Karma, and Mailchimp, said the tax-preparation business was hit as people who had filed taxes in recent years to receive pandemic-era stimulus and credits chose not to file this year.
That led Intuit to miss expectations for its third-quarter revenue in its report late on Tuesday. Shares were down more than 5% in premarket trading on Wednesday at $426.92.
However, analysts said that represents a buying opportunity as Intuit is raising its guidance based on strength in its other businesses.
“While revenue missed, we view the tax-growth impact as one-time in nature with better line of sight to key growth initiatives,” analysts at
Citi
wrote, as they raised their target price on the stock to $495 from $475 and kept a Buy rating.
Evercore analysts, led by Kirk Materne, kept an Outperform rating and a $505 target price on the stock. They wrote in a research note that Inuit is maintaining its long-term revenue growth target of between 8% and 12% for its Consumer business, which includes TurboTax.
“The shortfall in Tax was unexpected and likely remains an overhang on the shares in the near-term and potentially until the late September analyst day when the company can provide a ‘refresh’ on the consumer business,” the Evercore analysts wrote.
Intuit and its fellow tax-preparation company
H&R Block
(HRB) were hit recently on news of a U.S. government recommendation on allowing people to file taxes electronically for free directly with the Internal Revenue Service. Intuit CEO Sasan Goodarzi told analysts on an earnings call Tuesday the company didn’t see the initiative as a threat, as free tax software was already available.
Intuit reported adjusted earnings of $8.92 a share for the third quarter, up 17% from the same period a year earlier. Its revenue came to $6.02 billion, up 7%. Analysts had expected adjusted earnings of $8.48 a share on sales of $6.09 billion, according to a FactSet poll.
Intuit said it now expects fiscal 2023 revenue to grow by about 12% to 13%, up from previous guidance for growth of 10% to 12%. It raised its adjusted earnings guidance to between $14.20 and $14.25 a share, or growth of about 20%, up from 15% to 17% previously.
Write to Adam Clark at [email protected]
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