On Friday, Citi updated its assessment of Intuit Inc. (NASDAQ:INTU), a financial software company, by adjusting its price target to $727 from the previous $744 while sustaining a Buy rating on the stock. The revision follows Intuit's third fiscal quarter of 2024 performance, which surpassed expectations in revenue, EBIT, and EPS.
Intuit reported a significant beat for the third fiscal quarter, with revenue exceeding analyst predictions by $89 million or 1.3% compared to the 4-quarter average of 1.2%. The company also reported a $192 million beat on EBIT and a $0.50 beat on EPS. Following these results, Intuit raised its full-year forecasts for revenue, EBIT, and EPS, with particular improvements anticipated in the Small and Medium Business (SMB) segment.
However, the tax segment's long-term growth rate has come under scrutiny, despite the tax base and average revenue per user (ARPR) growing beyond expectations this year. Concerns have been raised about potential paid share loss in this area.
Nevertheless, Citi remains optimistic about Intuit's prospects, citing the success of Intuit's Live service, which is a $1.4 billion business growing at 17%, and the traction gained by its Assist feature. Moreover, the company's Payments volume accelerated to a 22% increase, demonstrating the resilience of Intuit's SMB sector.
Despite the positive outlook and the strong performance indicators, Citi has slightly lowered the price target for Intuit. The new target is based on a valuation rolled over to the fiscal year 2026, applying a multiple of 32 times the projected earnings per share for that year. This adjustment reflects a conservative stance amid the examination of the long-term growth potential in the tax segment.
InvestingPro Insights
Following Citi's recent assessment of Intuit Inc. (INTU), a deeper dive into the company's financials through InvestingPro data reveals additional strengths and considerations for investors. Intuit's market capitalization stands at a robust $185.42 billion, underscoring its substantial presence in the financial software market. The company's gross profit margin impressively reached 79.1% for the last twelve months as of Q2 2024, indicating efficient operations and a strong competitive position. Moreover, Intuit has demonstrated a commitment to shareholder returns, with a 0.54% dividend yield and a notable 15.38% dividend growth over the same period.
InvestingPro Tips highlight Intuit's consistent dividend increases over the past 14 years, which aligns with its latest dividend growth metric, showcasing the company's financial health and reliability for income-focused investors. Additionally, the company's gross profit margins stand out, reinforcing the positive sentiments shared by Citi analysts regarding Intuit's financial performance. For investors seeking a comprehensive analysis of Intuit's financials and future projections, InvestingPro offers a total of 18 tips, providing a broader perspective on the company's valuation and market position. Interested investors can unlock these insights and more with a special offer: use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at https://www.investing.com/pro/INTU.
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