Morgan Stanley Downgrades Intuit (INTU) to Underweight
- Top 10 News for 10/17 - 10/21: Merger Rumors Abound; CEOs Depart; Tesla Kicks Autopilot Up A Notch
- Wall Street ends flat; Microsoft rallies, healthcare falls
- AT&T (T) in Advanced Talks to Acquire Time Warner (TWX) - DJ
- Rockwell Automation (ROK) Said to Attract Takeover Interest from Schneider Electric - Source
- British American Tobacco Offers to Acquire Remaining Shares of Reynolds American (RAI) for $56.50/Share
Get inside Wall Street with StreetInsider Premium. Claim your 2-week 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."
Shares of Intuit closed at $109.54 yesterday.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Stifel Upgrades PayPal (PYPL) to Buy Following 'Solid' Q3 Results
- Jefferies Cuts Price Target on Crown Holdings (CCK) Following 3Q
- KLA-Tencor (KLAC) PT Raised to $85 at Cowen
Create E-mail Alert Related CategoriesAnalyst Comments, Analyst EPS View, Downgrades, Hot Comments, Hot Downgrades
Related EntitiesMorgan Stanley, Earnings
Sign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!