UBS Raises Price Target on Intuit (INTU) Following 3Q Beat and Raise
UBS reiterated a Buy rating on Intuit (NASDAQ: INTU), and raised the price target to $134.00 (from $125.00), following the company's 3Q earnings report. INTU reported revenue of $2,304m, ahead of UBS estimates of 2,235m. EPS was reported ar 3.43 beating estimates of 3.18. FY16 revenue guidance was raised to $4,660-4,680m from 4,525-4,600m and EPS to $3.63-3.65 from 3.45-3.50.
Analyst Brent Thill commented, "INTU stock is +11% YTD (including 6% in last 4 days), significantly outperforming NASDAQ Comp -3%, on a positively pre-announced strong tax season and expectations for a beat & raise – which it delivered. However, the stock in after-hours gave back most of Tue's 2.6% gain. We think investors are fixated on the 2nd qtr of decelerating QBO subs (YoY growth 57% in FQ1, 49% Q2, 45% Q3) and worried whether INTU can hit its FY17 goal of 2.0-2.2m subs. We see several reasons why that is very achievable: 1) We think FQ4 subs can hit 1.500m (high end of 1.475-1.500m guide) – which would mark another decel. to 40% YoY and is a net add of 103k vs. 140k in FQ3 and 110k in yr ago FQ4; to hit the mid-pt of 2-2.2m FY17 goal, growth needs to sustain at 40% YoY; to hit the low-end, growth can decel. to 33%; 2) decel. in Q2-Q3 was due to a reboot in Canada & India, which should rebound; 3) Brazil & France just came online; 4) only ~1% penetration of world TAM of 100m+ small bus. That said, as seen in ADBE's transition, we believe it's important to look at the broader ARR metric, which is growing at a healthy mid-20s rate. Our positive thesis remains unchanged: a consistent performer (7 yrs of pos. stock returns); quality mgmt. team; U.S. centric (no FX risk); and nearing completion of transition to a ratable rev model."
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Shares of Intuit closed at $107.31 yesterday.