Morgan Stanley analyst Adam Wood downgraded Intuit (NASDAQ: INTU) from Overweight to Equalweight with a price target of $335.00 (from $580.00).

The analyst comments: “Downgrade to Equal-weight on 3 Key Points:

1. Tax Overhang. With the key investor debate on the stock centering around the viability of the TurboTax business, the AI disruption bear case will likely not be dispelled until F3Q results in May 2027.

2. Upcoming FY27 Guide Risks being a Lose-Lose Situation. We see risk at Intuit's upcoming F4Q results and the subsequent guide for FY27 revenue. If management guides TurboTax in-line / above consensus' 6% YoY estimate, we fear the market will assume they are being aggressive and see downside risk to that guidance given the perceived structural AI risks in tax. If management guides TurboTax below consensus, then bears will point to that as validation that AI is structurally impairing the business.

3. AI Not Inflecting Growth Yet. Intuit's approach to AI has been to include additional AI capabilities in their higher priced plans and monetizing by having customers upgrade to those higher tiers. While this is likely the right long-term approach, it will take some time before this starts to accelerate revenue. As detailed in our Moat & Journey framework, Intuit has the 12th strongest moat across our entire software coverage group, but is ranked 34th on the journey piece.”

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Shares of Intuit closed at $293.82 yesterday.