On Friday, Stifel adjusted the price target on shares of Intuit (NASDAQ:INTU), a financial software company, to $690 from the previous target of $720, while retaining a Buy rating on the stock. The adjustment follows Intuit's third-quarter earnings report, which showed a 9% growth in TurboTax, indicating a robust tax season but with less upside than expected due to share loss with lower-end do-it-yourself customers.
Intuit has, however, made significant inroads in the higher-value Assisted market, with expectations for the company's Live business to expand by 17% year-over-year in fiscal year 2024, which equates to 30% of consumer revenues. Management plans to strategically focus on higher-spending tax cohorts moving forward, a move Stifel views as a strong driver of sustainable growth for the company.
In the Small Business segment, Intuit continued to perform well, reporting an 18% year-over-year increase. This growth was propelled by robust Services growth, including a notable 22% increase in Total Payment Volume, which rose by 2% quarter-over-quarter. However, Mailchimp, which Intuit acquired, experienced a slowdown after the initial boost from pricing benefits subsided.
Stifel's commentary highlighted confidence in Intuit's ability to maintain low double-digit top-line growth, with the potential to accelerate to mid-teen percentages over time. This optimism is based on the scaling of Live products and the company's increasing integration of artificial intelligence assist features and value-based pricing strategies.
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