Intuit Inc’s (ISIN: US4612021034) CEO announced that the company invested heavily in its data and Artificial Intelligence (AI) capabilities to deliver accelerated innovation. With AI’s potential coming to light in recent months, its promising future has been one that tech companies have been keen to invest in, and Intuit Inc is one of those companies.
Intuit’s third-quarter results were mixed as earnings beat Wall Street estimates by 5.21% to $7.38 per share (standardised), while revenues missed the mark by 1.20% to $6.01B. However, The company did raise its full-year guidance for revenue, operating income and earnings on the back of the resilient repeat customer.
Intuit’s share price could find some tailwinds in 2023 if the global economy avoids a mild recession and U.S. interest rates taper off to lower borrowing costs.
Technische Analyse
ntuit’s share price has trended lower, with the price moving below the 100-day moving average to establish a firm downtrend. However, despite the share price shifting below the moving average and forming lower highs, higher lows have created a symmetric triangle pattern. Support and resistance are located at the $384.50 and $462.80 per share levels, respectively.
With the range between the highs and lows narrowing as the price consolidates on lower volumes, neither bullish nor bearish investors have gained enough momentum to take the share price in one direction. With bulls and bears in contention, a high volume breakout above the symmetric triangle’s resistance trendline could indicate that bulls are winning the battle and taking the market out of balance to move the share price higher. The $489.43 level, which forms the second peak of 2022, could become a likely target.
Alternatively, a reversal could play out if the symmetric triangle’s resistance holds. Bullish investors will likely be better placed to take long positions at the symmetric triangles support or at the onset of volumes declining to the downside (indicating bearish momentum is wearing out).
Fundamentalanalyse
Intuit’s total revenue grew to $6B, up 7% from the same quarter a year ago. Intuit’s business segments grew to boost the top line, except for the Credit business, which suffered a 23% drop in revenue from the quarter a year ago.
The Credit Karma revenue struggled to pick up momentum year-on-year as higher interest rates adversely affected credit demand, including personal loans, home loans, auto loans and auto insurance.
The consumer group segment revenue surged 3% to $3.3B, while the Small Business and Self-Employed Group did most of the top line’s heavy lifting. The segment’s revenue was up 21% to $2B, while the Online Ecosystem leapt 23% to $1.5B. The QuickBooks online segment impressed for the quarter with a 25% revenue growth driven by customer growth and higher effective prices.
Positive performance in the top line had a spillover effect on the income statement, with operating income delivering a healthy 16% growth to $2.78B. In comparison, earnings per share surged 18% to $7.38 year-over-year.
Intuit revised its outlook upwards, as its executives felt confident in their business and ability to keep customers on board. Revenues are now expected to grow 12% to 13% for the year to between $14.28B billion and $14.32B, up from a 10% to 12% forecast earlier. Operating income is expected to follow suit with a growth of approximately 19% to 20% to between $3.07B to $3.09B, up from guidance of 9% to 13%. Finally, earnings per share of $7.78 to $7.83, representing growth of 7% to 8%, is expected, up from previous guidance of a decline of 5% to 1%. From a segmental perspective, the company expects positive performance in all segments except for the Credit Karma business.
After discounting for future cash flows, Intuit’s fair value came in at $474 per share. If the share price moves higher from the current levels, there could be room for 13%+ gains to the upside.
Intuit’s share price is highly correlated with the NASDAQ100’s performance as the two move in tandem. The NASDAQ100 has outperformed Intuit year-to-date, with a 23.84% growth versus 16.81% for Intuit. The market could be perceiving Intuit at a lower value with less potential to grow compared to the other components within the NASDAQ100.
Intuit’s EBIT Margin is relatively healthy and falls in the midrange of its main competitors. The company’s profitability has remained resilient in the past ten years and continues offering decent earnings opportunities.
Zusammenfassung
Intuit’s share price has struggled to gain enough traction to put the price in the path of an uptrend after a steep selloff in the prior year. However, the company’s quarterly results provided a promising outlook, primarily through the lens of customer growth. The $474 per share level could be attainable if the company makes it through the year in the absence of a mild recession or any extra steep rate hikes.
Sources: Intuit Inc, Reuters, TradingView, Koyfin
