Intuit’s [INTU] share price took off last week after the maker of accounting software QuickBooks raised its full year guidance. The announcement came during exceptionally strong first quarter earnings with the software company seeing growth across the board thanks to a couple of savvy acquisitions.
Even before the results, Intuit’s share price had been a standout performer in 2021. So far this year, the stock has gained 72%, easily outpacing the S&P 500’s 21.6% gain. Over a three month timeline, Intuit’s share price is up 17% and on Monday gained a further 4.16% despite market jitters over the Omnicrom variant. Although it came back down 4%, the capacity for indicates some resilience in a stock that performed well during the worst of the pandemic.
With the markets potentially looking at a broad decline now could be the time to pick up a high quality stock that still has good growth potential.
Strong earnings power Intuit’s share price
In the fiscal first quarter 2022, revenue came in at $2bn, up 52% from the $1.3bn in the same period last year. Non-GAAP earnings were $1.53 a share, up from $0.75.
QuickBooks Online Accounting revenue grew 32% year-on-year, while Online Services revenue grew 42% year-on-year, driven by QuickBooks Online payroll. CreditKarma, which Intuit purchased in December, contributed $418m in revenue.
Off the back of the strong results and the acquisition of email marketing platform MailChimp, Intuit raised its full year revenue guidance to between $12.2bn and $12.3bn for a growth rate of between 26% to 28%. Excluding Mailchimp, the company expects revenue growth of 18% to 20% percent, up from prior guidance of 15 to 16 percent.
Intuit's fiscal first quarter revenues 2022, up 52% from the same period last year
Non-GAAP operating income is now forecast to come in at $4.37bn to $4.4bn, a growth rate of between 25% to 27%, well up from the previous guidance of 16% to 18%.
For the second quarter, Intuit expects to see adjusted earnings of $1.84 to $1.88, topping Wall Street forecasts of $1.54 a share, according to Market Watch.
“We continue to see strong momentum and proof that our big bets are further positioning us for durable growth in the future, and we’re delighted that MailChimp has joined Intuit,” Chief Executive Sasan Goodarzi (pictured above) said in a press release.
Analysts see more upside in Intuit’s share price
Intuit is a reasonably mature tech company. However, through smart acquisitions it is now providing an ecosystem of products to help - and upsell to - small and medium business owners. Such shrewd dealings have pushed it to become more of a growth stock.
“We continue to see strong momentum and proof that our big bets are further positioning us for durable growth in the future, and we’re delighted that MailChimp has joined Intuit” - Intuit CEO Sasan Goodarzi
"With Mailchimp now part of the Intuit family, we are uniquely positioned to enable small- and mid-market businesses to combine their customer data from Mailchimp and purchase data from QuickBooks to deliver actionable insights they need to grow and run their businesses with confidence," Goodarzi said during a conference call.
Can Intuit’s share price maintain its growth story in the long-term? Wall Street thinks so with first quarter earnings providing a catalyst for several analyst upgrades.
Evercore ISI analyst Kirk Materne raised his target from $650 to $720, keeping his Outperform rating on the stock. The analyst sees the company’s suite of products for the small business as ‘shining through’ and predicts decent revenue growth over the next few years.
Goldman Sachs’ Kash Rangan upgraded his rating on the stock from Neutral to Buy, citing the strong first quarter numbers. Rangen’s $840 price target is one of the more bullish on the stock. Another bull on Intuit’s share price is Barclays’ Raimo Lenschow who raised the bank’s target on the stock from $710 to $802.
Other upgrades include Oppenheimer bumping its target from $584 to $696 and Deutsche Bank pinning a $780 target on Intuit, up from $700.
Among the analysts tracking Intuit’s share price on Yahoo Finance, the stock has an average $742.37 price target - hitting this would see a 13.8% upside on Tuesday’s close.
Disclaimer Past performance is not a reliable indicator of future results.
CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.
CMC Markets does not endorse or offer opinion on the trading strategies used by the author. Their trading strategies do not guarantee any return and CMC Markets shall not be held responsible for any loss that you may incur, either directly or indirectly, arising from any investment based on any information contained herein.
*Tax treatment depends on individual circumstances and can change or may differ in a jurisdiction other than the UK.