- Target price cut by 9% on Credit Karma concerns
- Q1 results beat on profits and revenues
- Analysts remain overwhelmingly positive on stock
Analysts at broker Jefferies have lowered the price target on Intuit (INTU:NASDAQ) from $575 to $525 despite latest earnings beating analyst estimates.
The global financial technology platform is best-known in the UK for its small business accounting suite QuickBooks and Credit Karma, the personal credit scoring platform, but it also runs the TurboTax and Mailchimp, the personal accounting and email marketing platforms.
Q1 EARNINGS BEAT FOFRECASTS
Earlier this week (29 November), Intuit announced financial results for the first quarter of fiscal 2023 that comfortably outstripped expectations. The figures included operating profits up 19% at $662 million on $2.6 billion revenues, 29% higher. That beat expectations of 23% to 25% revenue growth while operating profits soared beyond the $469 million to $489 million forecast range.
‘We had a strong first quarter as we innovated and delivered on our strategy to be the global AI-driven expert platform powering prosperity for consumers and small businesses,’ said Sasan Goodarzi, Intuit’s chief executive officer.
‘We continue to see proof that the benefits of our financial technology platform are more mission-critical than ever to our customers in an uncertain macro environment.’
WHY THE DOWNGRADE?
The problem is largely down to Credit Karma, acquired for $7.1 billion in February 2020.
‘While we are pleased with first quarter results, we shared earlier this month that Credit Karma experienced continuing deterioration across all verticals in the last few weeks of the first quarter,’ said Michelle Clatterbuck, Intuit’s chief financial officer.
Credit Karma contributed around 14% of fiscal 2022’s rough $12.7 billion revenue, according to analysts at Megabuyte. ‘As the macroeconomic conditions worsen through fiscal 2023, we expect financial institutions will become even more cautious, and Credit Karma will continue to struggle,’ said Megabuyte analyst Tom Kennedy.
PRICE TARGET NOW
This helps explain why Jefferies trimmed its price target for the stock, continuing a year-long run of downgrades. According to Koyfin data, the average price target for the shares calculated from the 24 analysts that cover the stock is now at a year low $485, having been as high as $732 at the start of 2022.
This has mimicked Intuit’s share price, which has lost 35% this year, even after the 7% rally seen in the wake of the Q1 results. The shares are seen opening at $407.40 when Wall Street restarts later today.
Jefferies remains one of 20 analysts that continue to tell clients to buy the stock, with the other four maintaining hold recommendations.
