Argus Research has reaffirmed its BUY rating on Intuit Incorporated (NASDAQ: INTU), highlighting the company’s strong fiscal performance and its positioning as a global financial technology leader. Despite a minor stock pullback post-earnings, the company showcased robust revenue growth in fiscal 1Q25 and reiterated its long-term growth guidance. Intuit’s diversified product portfolio, including QuickBooks, TurboTax, and its AI-driven platform strategy, continues to drive value. With a target price of $740, Argus sees significant upside potential from the current price of $640.12. However, investors are encouraged to conduct due diligence before making investment decisions.

Performance Highlights for Fiscal 1Q25

Revenue Growth Surpasses Expectations: Intuit reported fiscal 1Q25 revenue of $3.28 billion, marking a 10% year-over-year increase and exceeding both management guidance and consensus estimates.

Non-GAAP EPS Beats Projections: The company delivered non-GAAP earnings of $2.50 per share, a 2% increase from the previous year, outperforming the guidance range of $2.33–$2.38.

Segmental Performance:

Global Business Solutions (GBS): Formerly the Small Business & Self-Employed Group, GBS reported revenue of $2.54 billion, growing 9% year-over-year. Notably, the online ecosystem saw a 20% growth in revenue, driven by QuickBooks Online and Mailchimp.
Credit Karma: This segment experienced a strong recovery, with a 29% increase in revenue to $524 million, supported by growth in auto insurance, personal loans, and credit cards.

Key Strategic Initiatives

Emphasis on AI-Driven Growth: Intuit continues to leverage its Generative AI platform, GenOS, to enhance customer experiences and drive innovation. The platform integrates AI solutions across products like Intuit Assist, enabling users to automate financial management tasks efficiently.

Expanding Addressable Markets: The company is increasingly focusing on mid-market customers, offering integrated financial solutions through QuickBooks and Mailchimp. Intuit also aims to disrupt traditional tax preparation with TurboTax Live and its Virtual Expert Platform.

Operational Efficiency: Despite rising operating costs, Intuit has managed to improve gross margins across its key business lines, showcasing strong operational leverage.

Valuation and Target Price

Argus Target Price: Intuit’s 12-month target price remains at $740, reflecting confidence in its growth trajectory.

Peer Comparisons: Intuit trades at a forward P/E ratio of 35x FY25 EPS, slightly below its historical average but higher than sector peers, underscoring its premium valuation due to consistent performance.

Discounted Free Cash Flow Analysis: Argus’s valuation model estimates Intuit’s intrinsic value at $900, driven by expected double-digit revenue and earnings growth in FY25 and FY26.

Growth Drivers

Robust Product Portfolio: Intuit’s leadership in tax preparation (TurboTax) and accounting software (QuickBooks) provides a steady revenue stream, complemented by Mailchimp’s marketing automation capabilities.

AI Integration: The adoption of GenOS positions Intuit as a leader in AI-powered financial technology, enhancing productivity and customer satisfaction.

Cross-Selling Opportunities: Intuit leverages its ecosystem to encourage cross-utilization of services, such as integrating TurboTax with Credit Karma for seamless tax preparation.

Potential Risks and Considerations

Regulatory Scrutiny: Intuit faces potential challenges from the U.S. Federal Trade Commission (FTC) regarding its marketing practices for TurboTax.

Macroeconomic Uncertainty: While consumer defaults remain low, rising interest rates and inflation could impact demand for financial products like personal loans and credit cards.

Market Competition: Intuit faces increasing competition from emerging fintech players offering low-cost or free alternatives to its products.

Outlook for FY25

Revenue and Earnings Guidance: Management projects FY25 revenue growth of 12–13% and non-GAAP EPS growth of 14%, reflecting confidence in the business model despite headwinds.

Capital Allocation: The company continues to prioritize shareholder returns through dividend increases (16% growth in 2024) and opportunistic share repurchases.

Long-Term Growth Forecast: With an EPS growth estimate of 11% annually over the next five years, Intuit is poised for sustained expansion.