Brean Capital Raises Price Target on Intuit (INTU) to $135 Following Solid 4Q
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Brean Capital reiterated a Buy rating on Intuit (NASDAQ: INTU), and raised the price target to $135.00 (from $130.00), following the company's 4Q earnings report. INTU reported modest revenue upside and QBO subscriber count, while showing strong margin leverage. Guidance for FY17 was relatively in-line. However, F1Q guidance was lower than Street estimates.
Analyst Yun Kim commented, "INTU reported solid F4Q results, driven by steady business trends in its QuickBooks-driven Small Business Group (SBG). It also issued mostly in-line FY17 guidance, including in-line EPS guidance which some investors thought could be at risk. QBO (QuickBooks Online) subscriber growth showed another solid gain at 41%. The company plans to introduce QBO Self-Employed (SE) to the international markets, which will likely provide the catalyst needed to accelerate sub growth in FY17. While monetization rate of its QuickBooks franchise (or SBG) remains a key concern for some investors, we highlight that the company continues to show y/y improvement in its SBG operating margin for the past four quarters, and we expect that trend to continue. In addition, we also note that the total QuickBooks user base (QBO subscriber + QB Desktop unit sales and subscribers) will show accelerated growth going forward, providing for greater monetization opportunity ahead. Bottom line, we believe INTU can achieve the high end of its FY17 EPS guidance while still achieving the high end of its QBO sub target. Shares trade at 19x EV/FCF based on our CY17 estimate, vs. 21x industry average, which we believe undervalues its strong cash flow growth potential. We are maintaining Buy and raising our TP to $135 from $130."
Shares of Intuit closed at $113.84 yesterday.
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Create E-mail Alert Related CategoriesAnalyst Comments, Analyst EPS Change, Analyst EPS View, Analyst PT Change
Related EntitiesEarnings, Brean Capital
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