The Street's Reaction To Intuit's Earnings: 'Feeling Better'

TurboTax and QuickBooks parent company Intuit Inc. INTU reported fiscal first-quarter results highlighted by a 14% revenue growth. Here is a summary of how some of the Street's top analysts reacted to the print.

The Analysts

RBC Capital Markets analyst Alex Zukin maintains an Outperform rating on Intuit's stock with a price target lifted from $405 to $415.

Morgan Stanley analyst Keith Weiss maintains an Overweight rating with a price target lifted from $400 to $455.

KeyBanc Capital Markets Josh Beck maintains an Overweight rating with a price target lifted from $375 to $390.

Piper Sandler analyst Arvind Ramnani maintains an Overweight rating with a price target lifted from $378 to $412.

RBC: 'Impressive' Quarter

Zukin said Intuit reported another "impressive" quarter as Small Business revenue rose 13% year-over-year to $1.18 billion and came in 10% better than expected. Total revenue was up 14% from last year to $1.32 billion while operating margins were "strong" at 25.2% and gross margins of 82.3% mark a record fiscal first-quarter high.

Management reinstated its full-year revenue outlook of $8.265 billion to $8.415 billion, partially driven by Small Business customer acquisition returning to pre-COVID levels. Unless there are new rounds of shutdowns, the company should be able to achieve its guidance while a vaccine and possible stimulus could generate significant upside.

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Morgan Stanley: 'Feeling Better'

Intuit's report was strong enough to suggest the company has a durable path to generate at least 20% EPS growth, Weiss wrote in a note. Management displayed a positive tone related to the resiliency of its Small Business platform and the fiscal second quarter should mark a trough for the segment.

Management's full-year guidance was based on expectations for 9% to 10% growth in the Consumer Segment and 110 basis points of operating margin expansion. Coupled with the margins beat in the reported quarter at 25.2%, the analyst is "feeling better" about margins moving forward.

KeyBanc: Bullish Case Reaffirmed

The bullish case for Intuit's stock was reinforced after the company's "across the board" earnings beat, Beck said. Most notably, the SMB segment showed resiliency and was helped by a rebound in online services.

Management expressed a confident tone in the Credit Karma deal and it should close by the end of the year. Encouragingly, potential synergy gains from Credit Karma aren't included in management's 2021 outlook.

Piper: What The Bulls And Bears Like

Exiting Intuit's report, bulls are focused on three key takeaways, Ramnani wrote in a note. These include:

• Average revenue per customer (ARPC) growth remains one of management's top priorities
• The Online ecosystem revenue grew 24% year-over-year despite lapping the impact of last year's price increase
• The mid-market SMB offerings should continue gaining traction from product innovation like integrated CRM solutions.

On the other hand, bears are focusing on these three takeaways:

• Credit Karma is likely to be dilutive to EPS through fiscal 2022
• A $40 million legal settlement in the quarter is "nominal" but the company faces another $400 million in arbitration fees over the coming quarters
• Retention dip continued from small business failures.

INTU Price Action: Shares of Intuit were trading lower by 3% Friday morning at $351.31.