Accounting software firm Intuit rose over 3% Monday after KeyBanc increased its price target on the stock.
Analyst Josh Beck says his analysis of Key First and IRS data prompts a more positive bias on TurboTax fundamentals. Beck also argues the company has synergy opportunities through its recent acquisition of Credit Karma – a fintech startup with more than 37 million active users. In February, Intuit announced that it had bought the firm for $7.1 billion to bolster its personal finance offerings.
As of Aug. 25, 2020, Intuit’s shares have an $86.87 billion market capitalization, offer a modest 0.66% dividend yield and trade 28% higher on the year. Over the past three months, they have gained 16%. From a valuation standpoint, the stock trades at about 40 times future earnings, above its longer-term multiple of 30 times.
Analysts expect Intuit to post fiscal Q4 earnings of $1.20 per share when the company reports its quarterly results after the closing bell on Tuesday. This compares to a loss of 9 cents a share in the year-ago quarter. Meanwhile, the Street tips revenues to come in at $1.55 billion, indicating year-over-year (YoY) top-line growth of 55.8%. The postponement of IRS tax filing from the third quarter to the fourth is likely to have provided a considerable tailwind during the period.
Analysts remain bullish, impressed by financial software company’s opportunity to grow its QuickBooks Online subscriber base. Currently, the stock receives 12 ‘Buy’ ratings, 6 ‘Hold ratings, and just 2 ‘Sell’ ratings. Price targets range from as high as $350 to as low as $220, with the median consensus pegged at $308.
Intuit shares broke above an ascending triangle pattern last week, with gains accelerating on above-average volume yesterday after the KeyBanc price upgrade. Given the relative strength index (RSI) sits in overbought territory, traders should consider waiting for a pullback entry instead of chasing recent gains.
Look for buying opportunities near $313.50, where the stock finds support from the triangle’s upper trendline. Traders who enter at this level should consider placing a stop-loss order below the 50-day simple moving average (SMA). Set a profit target that is at least twice the amount risked. For instance, if using a $15 stop, consider targeting a move of at least $30.
Tim brings over 20 years’ of experience working at some of Wall Street’s biggest investment banks, including Goldman Sacks, Bank of America Merrill Lynch, Citigroup, and Morgan Stanley.