Why Analysts Are Bullish on Intuit Despite a Forecast That Missed Estimates

Intuit (INTU) shares tumbled Friday after the company issued a current-quarter forecast that missed estimates, but analysts were bullish on the stock, suggesting the company’s early spending on marketing could drive later growth. 

The TurboTax and Credit Karma operator called for second-quarter revenue of $3.81 billion to $3.85 billion and earnings per share (EPS) of 84 cents to 90 cents, both of which were below the analyst consensus compiled by Visible Alpha. 

Analysts at Jefferies said Intuit’s results may have been weighed down by its “decision to start marketing TurboTax earlier” and add about 200 salespeople to its roster in an effort to drive growth. The analysts maintained a “buy” rating for the stock and raised their price target to $800 from $790, implying about 23% upside from Friday’s intraday price.

Deutsche Bank, which maintained a “buy” rating and $750 price target, noted the company “manages spend on a full-year basis, which can lead to variability in quarter-to-quarter margin performance as the timing of expenses/investments may shift.” On a full-year basis, Intuit reiterated its EPS forecast of $12.34 to $12.54.

Analysts at Citi, who maintained a “buy” rating and $760 price target, added that Intuit said it held discussions with the incoming Trump administration about reports of plans to launch a competing free tax-filing app, “with fears likely abated.”

Shares of Intuit were down 4% in intraday trading Friday at $649.43. They’ve gained close to 4% since the start of the year.