Intuit Faces Growing Risks in TurboTax and QuickBooks: Morgan Stanley Analyst

Intuit Inc INTU stock is trading lower Wednesday after Morgan Stanley analyst Keith Weiss downgraded the stock from Overweight to Equal-Weight and lowered its price target from $750 to $685.

Weiss noted that investors have historically been willing to pay a premium multiple for Intuit, given its lack of cyclicality and near-monopoly status in its key segments.

The analyst said Intuit’s revenue has become more volatile since the introduction of Credit Karma and Mailchimp.  

Furthermore, Weiss noted that the current transition of the TurboTax business from DIY to Assisted presents additional near-term risks.

With expectations already high at QuickBooks, the analyst noted little room for error in that business, which presents an additional risk if execution is not perfect.

The analyst already noted Intuit’s premium multiple compressing. Investors have been questioning the rationale for paying a premium multiple amid rising cyclicality and risks in the business at this high valuation multiple.

Given the risks outlined at TurboTax and QuickBooks and the added volatility from Credit Karma and Mailchimp, the analyst noted that paying a premium multiple for Intuit is less justified today.

Thus, the analyst applied a 2.1x PEG, a slight discount to the historical PEG 2.2x. Applying this to his unchanged calendar year 2025 EPS of $20.83 and calendar year 2025 growth rate of 15% implies a PE multiple of 33x.

Weiss’ fiscal 2025 EPS estimate of $19.65, +17% year-on-year, appears fair; Intuit currently trades at a 2.3X PEG ratio against that estimate, a significant premium to peers.

Intuit Stock Prediction For 2024

Equity research analysts on and off Wall Street typically use earnings growth and fundamental research as a form of valuation and forecasting. But many in trading turn to technical analysis as a way to form predictive models for share price trajectory.

Some investors look to trends to help forecast where they believe a stock could trade at a certain point in the future. Looking at Intuit, an investor could make an assessment about a stock's long term prospects using a moving average and trend line. If they believe a stock will remain above the moving average, which many believe is a bullish signal, they can extrapolate that trend into the future using a trend line. For Intuit, the 200-day moving average sits at $616.56, according to Benzinga Pro, which is below the current price of $635.17. For more on charts and trend lines, see a description here.

Traders believe that when a stock is above its moving average, it is a generally bullish signal, and when it crosses below, it is a more negative signal. Investors could use trend lines to make an educated guess about where a stock could trade at a later date if conditions remain stable.

Price Action: INTU shares are trading lower by 1.39% at $635.53 at the last check on Wednesday.

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