Intuit Inc. (NASDAQ:INTU) shares fell 6.8% to US$285 in the week since its latest quarterly results. Revenues were US$1.7b, approximately in line with what analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at US$0.91, an impressive 29% ahead of estimates. Following the result, analysts have updated their earnings model, and it would be good to know whether they think there’s been a strong change in the company’s prospects, or if it’s business as usual. Readers will be glad to know we’ve aggregated the latest statutory forecasts to see whether analysts have changed their mind on Intuit after the latest results.
See our latest analysis for Intuit
Taking into account the latest results, the current consensus from Intuit’s 19 analysts is for revenues of US$7.54b in 2020, which would reflect a credible 5.8% increase on its sales over the past 12 months. Statutory earnings per share are expected to rise 3.2% to US$6.46. Yet prior to the latest earnings, analysts had been forecasting revenues of US$7.53b and earnings per share (EPS) of US$6.44 in 2020. So it’s pretty clear that, although analysts have updated their estimates, there’s been no major change in expectations for the business following the latest results.
Analysts reconfirmed their price target of US$301, showing that the business is executing well and in line with expectations. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company’s valuation. The most optimistic Intuit analyst has a price target of US$345 per share, while the most pessimistic values it at US$210. This shows there is still quite a bit of diversity in estimates, but analysts don’t appear to be totally split on the stock as though it might be a success or failure situation.
Zooming out to look at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up both against past performance, and against industry growth estimates. It’s pretty clear that analysts expect Intuit’s revenue growth will slow down substantially, with revenues next year expected to grow 5.8%, compared to a historical growth rate of 12% over the past five years. Compare this against other companies (with analyst forecasts) in the market, which are in aggregate expected to see revenue growth of 12% next year. Factoring in the forecast slowdown in growth, it seems obvious that analysts still expect Intuit to grow slower than the wider market.
The Bottom Line
The most important thing to take away is that there’s been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations – although our data does suggest that Intuit’s revenues are expected to perform worse than the wider market. The consensus price target held steady at US$301, with the latest estimates not enough to have an impact on analysts’ estimated valuations.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Intuit going out to 2024, and you can see them free on our platform here..
We also provide an overview of the Intuit Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.
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