UBS Remains Bullish After Hosting Meetings with Intuit (INTU) Management
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UBS reiterated a Buy rating and $135.00 price target on Intuit (NASDAQ: INTU) after hosting management for meetings in London. After 3 yrs of share gains, TurboTax ended FY16 with 65% of the DIY software market. CEO Smith views any potential simplification of the tax code as shifting tax filers from expensive prof'l tax preparers and tax stores to DIY software, thus benefiting INTU. President-elect Trump has proposed cutting the corporate tax rate from 35% to 15%. If the final rate ends at 25% vs. INTU's current 32% GAAP tax rate, we estimate INTU's EPS would benefit by $0.40-0.60.
Analyst Brent Thill commented, "We hosted INTU CEO Brad Smith for a day of meetings in London. The tone was upbeat, coming off a FQ1 beat that saw encouraging metrics for QuickBooks (QB). INTU's small business customer base is healthy and growing (up 5% after some flat years). Total global QB client base is ~5M including 3.3M on QB Desktop (QBD) and 1.6M QB Online (QBO). Of these, >90% of QBD (~3M) and >80% of QBO (1.3M) are in the U.S., but int'l is growing fast (note UK QBO subs +87%). There are 6 countries of focus (worth a TAM of 135M+ cos vs. US 65M, global 800M+). QBO pdt is fully ready in Canada, UK, & Australia. France and Brazil should be ready in the next 3 mos. India is expected to relaunch in spring/summer. With QB Self Employed (QBSE) growing rapidly (FQ1 subs up >3x y/y to 110K vs. TAM 750M+), we are confident INTU can add the 500-700K subs needed to hit FY17 goal of 2.0-2.2M. Our positive thesis remains unchanged: a consistent performer (7+ years of pos. stock returns); quality mgmt. team; cash return via dividends & share repurchase; U.S. centric (95% of revs; no FX risk); and nearing completion of transition to a ratable rev model."
Shares of Intuit closed at $113.68 yesterday.
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