On Friday, financial software company Intuit (NASDAQ:INTU) stock received a vote of confidence from a major financial institution. Citi maintained its Buy rating on Intuit and increased its shares target to $760 from the previous $750.
This adjustment followed Intuit's announcement of better-than-expected fourth-quarter results for the fiscal year 2024, which showcased a revenue upside of $99 million against consensus estimates.
The growth was attributed to strong performances in the small and medium-sized business (SMB) sector, which contributed an additional $57 million, and the consumer tax platform Credit Karma, which added $45 million.
Intuit's initial guidance for the fiscal year 2025 also surpassed expectations, with projections exceeding consensus by $90 million. The company anticipates SMB growth to accelerate to 16-17%, compared to the 15.2% consensus estimate.
Intuit's strategy includes a push further into the upmarket segment, focusing on average revenue per customer (ARPC) through pricing and product mix rather than solely on volume growth. This approach applies to both its SMB and consumer segments.
Despite the positive outlook, there is a note of caution regarding the medium-term guidance for the tax segment and a long-term cut in SMB unit expectations.
However, Citi's analysis suggests optimism, as the firm is encouraged by the raised SMB forecast. Citi believes that Intuit's shift towards higher market segments will lead to sustainable growth in ARPC.
The company's strategic shift towards ARPC growth rather than volume indicates a focus on increasing revenue through enhanced offerings and pricing strategies.
Intuit's fourth-quarter solid performance and optimistic guidance for the upcoming fiscal year have bolstered confidence in the company's stock among investors. Citi's revised price target reflects this sentiment, as the firm reaffirms its Buy rating on Intuit shares.
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