Morgan Stanley Downgrades Intuit (INTU) to Underweight

September 13, 2016 6:34 AM EDT
Get Alerts INTU Hot Sheet
Price: $108.17 +0.80%

Rating Summary:
    9 Buy, 10 Hold, 3 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 30 | Down: 50 | New: 20
Trade INTU Now!
Join SI Premium – FREE

Get the Pulse of the Market with's Pulse Picks. Get your Free Trial here.

(Updated - September 13, 2016 11:07 AM EDT)

Morgan Stanley downgraded Intuit (NASDAQ: INTU) from Equalweight to Underweight with a price target of $105 (unchanged). With a 24x CY17 P/E multiple, analyst Keith Weiss sees valuation as full, and he rates the stock Underweight given his price target.

"With our Base case pointing to 34% operating margins in FY17e, we think management's margin guidance of 33-34% and consensus of 34% are achievable. The change to 3-year revenue recognition for QuickBooks Desktop (QBDT) in FY15 provides a key source of margin expansion in FY17e and in FY18e. However, margin expansion beyond FY18e likely proves difficult as a growing mix of Small Business revenue versus the higher margin Tax business offsets the tailwind of steadily improving Small Business segment margins," said Weiss.

The analyst added, "Using our current QuickBooks Online (QBO) subscriber forecast, our Base Case analysis suggests that Intuit operating margins hit a ceiling at ~35% post FY18e thru FY21e. With limited room for margin expansion, we forecast a mid-teens earnings growth profile for INTU over the next several years. While a durable subscriber base deserves a premium, at 24X CY17e PE, current multiples reflect this – limiting upside from current levels, in our view."

For an analyst ratings summary and ratings history on Intuit click here. For more ratings news on Intuit click here.

Shares of Intuit closed at $109.54 yesterday.

Serious News for Serious Traders! Try Premium Free!

You May Also Be Interested In

Related Categories

Analyst Comments, Analyst EPS View, Downgrades, Hot Comments, Hot Downgrades

Related Entities

Morgan Stanley, Earnings

Add Your Comment