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Analyst Blog

Shares of Intuit Inc. hit a new 52-week high on Dec 2, eventually closing at $74.23. The closing share price represents a decent one-year return of about 23.9% and year-to-date return of about 19.8%. Average volume of shares traded over the last three months stands at approximately 2,104K.

Intuit is a leading provider of business and financial management solutions to small and medium-sized businesses (SMB), consumers, accounting professionals and financial institutions.  The recent realignment of the company’s operations is expected to yield long-term positive results.

It is worth noting that the share price has been increasing continuously since the company reported first-quarter results on Nov 21. Intuit reported adjusted loss per share from continuing operations of $0.18 per share in the first quarter of fiscal 2014, which was narrower than the Zacks Consensus Estimate of a loss of $0.20 per share.

Revenues of $622.0 million increased 10.7% on a year-over-year basis, beating the Zacks Consensus Estimate of $603.0 million. The year-over-year improvement was mainly due to broad-based strength across all segments.

The other positive factor for Intuit was the acquisition of Prestwick Services, LLC, a provider of payroll based billing and payment solutions. The acquisition is expected to build a platform that will enable small businesses to simplify the calculation of workers compensation insurance premiums. Additionally, the synergies from the acquisition will help Intuit to gain traction in the SMB segment.

Additionally, the company has also unveiled the latest version of QuickBooks Online. The new offering provides improved solutions to manage payroll, inventory, sales and other needs of a small business.

We are positive on Intuit’s growing SMB exposure and believe that the strategic acquisitions will continue to support the segment. The higher adoption rate of its cloud-based services and products is another positive factor. Moreover, the company’s accelerated share buyback program would aid the bottom line.

However, competition from leading payroll solution providers, Paychex Inc. , and Automatic Data Processing , seasonality of Intuit’s tax business and the ongoing uncertainty in the economy concern us.

Currently, Intuit has a Zacks Rank #3 (Hold). SanDisk Corp. is a better-ranked stock in the technology sector with a Zacks Rank #1 (Strong Buy).

 

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