On Wednesday, Mizuho (NYSE:MFG) maintained a positive outlook on Intuit (NASDAQ:INTU), reiterating an Outperform rating and a price target of $725.00. The firm's analysis highlighted the QuickBooks (QB) Online business as a key growth driver for Intuit's fiscal first quarter (FQ1), propelled by increased adoption in the mid-market segment and favorable pricing dynamics. This is expected to counterbalance the challenges faced by the QB Desktop segment.
In the consumer division, despite a difficult comparison from the previous year's first fiscal quarter, only a small portion of consumer tax revenue, roughly 3-4%, is typically realized in FQ1. Credit Karma (CK), another Intuit product, is anticipated to surpass conservative consensus expectations modestly in FQ1. However, the operational margin for the quarter is projected to align with previous figures due to the timing of new hires and layoffs.
Looking forward to fiscal year 2025, Mizuho predicts a margin expansion of approximately 50-100 basis points for Intuit, which is ahead of the consensus. This projection comes after Intuit's shares reached a new 52-week high, climbing 10% post-election.
The market's optimism is attributed to the belief that the new administration's policies will be beneficial for the small and medium-sized business (SMB) economy and may reduce the Internal Revenue Service's (IRS) budget, thereby lowering the likelihood of the IRS creating its own tax filing platform.
Intuit is considered a defensive stock with robust cash flows and a history of delivering consistent returns to shareholders. The company's stock performance and the favorable market conditions following the recent election have reinforced Mizuho's Outperform rating.
In other recent news, Intuit Inc (NASDAQ:INTU). has been the subject of several analyst ratings. Citi and Jefferies have reaffirmed their Buy ratings for Intuit, highlighting the firm's resilience despite potential competition from an IRS mobile tax filing application. Scotiabank (TSX:BNS) initiated coverage on Intuit with a "Sector Perform" rating, recognizing the company's significant data assets. BMO Capital Markets and Mizuho maintained an Outperform rating, while UBS, Evercore ISI, and Citi expressed positive sentiments about Intuit's strategic direction and growth prospects.
Intuit has confirmed its revenue expectations for fiscal year 2025, projecting a 12 to 13 percent growth. This is despite a predicted $160 million revenue decrease in Q1 due to changes in the desktop ecosystem. The company's cash and investment reserves remain strong, reported at $4.1 billion at the end of Q4.
The company has also announced changes to its compensation program for non-employee directors, aligning director remuneration with industry standards.
InvestingPro Insights
Intuit's strong market position and financial performance are further highlighted by recent data from InvestingPro. The company boasts a substantial market capitalization of $180.56 billion, reflecting its significant presence in the software industry. Intuit's impressive gross profit margin of 79.62% for the last twelve months as of Q4 2024 underscores its operational efficiency and aligns with Mizuho's positive outlook on the company's growth prospects.
InvestingPro Tips reveal that Intuit has raised its dividend for 14 consecutive years, demonstrating a commitment to shareholder returns that complements Mizuho's view of the company as a defensive stock with consistent returns. Additionally, Intuit's revenue growth of 13.34% over the last twelve months supports the analyst's expectations for continued expansion, particularly in the QuickBooks Online segment.
It's worth noting that while Intuit's P/E ratio stands at 60.64, which may seem high, this should be considered in the context of the company's strong market position and growth potential highlighted in the article. Investors seeking more comprehensive analysis can find 13 additional InvestingPro Tips for Intuit, offering deeper insights into the company's financial health and market performance.
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