Intuit Beats With Q3 Guidance But Doesn’t Raise Full-Year Outlook
No. 1 tax-preparation software maker Intuit ( INTU ) — as it heads into its busy season — posted Q2 earnings and Q3 revenue guidance that beat Wall Street expectations, only to see its shares fall. One analyst says that the shares might be falling because the company didn’t raise its guidance for the year. At least two analysts raised their price targets on Intuit stock after the earnings release, and another was bullish on the tax season. Yet Intuit stock was down 5%, near 95, in afternoon trading on the stock market today . In an interview after the earnings release late Thursday, Intuit CFO Neil Williams said that the company’s “momentum is really continuing into Q3.” Intuit said that sales for its fiscal Q2, which ended Jan. 31, rose 23% from the year-earlier quarter to $923 million. The company swung to a 25-cent per-share profit minus items from a 6-cent loss in the year-earlier quarter. Analysts polled by Thomson Reuters had expected $893 million and 19 cents. The company doesn’t give earnings guidance, but it expects Q3 sales of $2.2 billion to $2.26 billion — at the midpoint up only 4.4% from the year-earlier quarter but above the $2.2 billion analyst consensus. Wall Street expects EPS ex items to rise 10%, to $3.15 per share. For the fiscal year, Intuit sees revenue of $4.5 billion to $4.6 billion, up 8.5% at the midpoint. But the company didn’t raise its guidance for the year, RBC Capital Markets analyst Ross MacMillan told IBD, and there are questions about the company’s underlying growth potential. Another factor could be the strong earnings and guidance this week from software makers Salesforce.com ( CRM ) and Palo Alto Networks ( PANW ). Intuit, MacMillan says, is regarded as a “defensive” stock play, but if other stocks are doing well, Intuit is less attractive. In a research note, MacMillan said that Intuit’s TurboTax sales stood out last quarter, rising 9%. He hiked his price target on Intuit stock — but only to 93 from 91. UBS analyst Brent Thill called the results the “best start to tax season in 13 years.” The fiscal Q3 tax season is always the company’s biggest quarter. “We’re in the third year of a multiyear journey and are beginning to see a sea change in how Americans prepare their taxes, driven by the massive innovation across the TurboTax experience combined with a breakthrough marketing campaign that makes our product the hero,” Sasan Goodarzi, executive vice president and general manager of Intuit’s Consumer Tax Group, said in the earnings release. Part of Intuit’s plan to drive consumer tax growth is to leverage its do-it-yourself tax packages, CFO Williams told IBD. “Think about growing the DIY market as growing our total addressable market,” he said. Thill also says that Intuit is a good defensive play. Williams agrees, saying that the small businesses that comprise much of Intuit’s customer base often turn to its software packages when the economy heads south. Besides TurboTax, Intuit is known for its Quicken and QuickBooks small-business software. “Our products are needed most when small-business owners are maybe facing some headwinds economically.” Williams said. “We do well with economic uncertainty.” Wedbush analyst Gil Luria raised his price target on Intuit stock to 100 from 90. Intuit rival H&R Block ( HRB ), which makes the other major tax-preparation software product, is slated to report fiscal Q3 earnings on Thursday.