Intuit Has Substantial Growth Runway, Bullish KeyBanc Says After Q4 Beat

Intuit Inc. INTU delivered a fourth-quarter beat Thursday on the back of the robust performance of its QuickBooks franchise and accelerating international subscription growth.

The company has a substantial runway for growth driven by fintech adoption and international prospects, according to KeyBanc Capital Markets.

The Analyst

Josh Beck maintained an Overweight rating on Intuit and raised the price target from $300 to $305.

The Thesis

Intuit’s fourth-quarter beat was both broad-based and high quality, Beck said in a Thursday note. (See his track record here). 

The company reported total revenue of $994 million, representing 15% year-on-year growth and coming in higher than the Street estimate of $966 million. The non-GAAP EPS loss of 9 cents was better than the Street’s expected loss per share of 15 cents, the analyst said. 

The Small Business and Self Employed segment generated revenue of $905 million, significantly higher than the Street estimate of $871.3 million. Online Ecosystem revenue grew 35%, backed by strong subscriber growth at QuickBooks.

QBO Payments charge volume grew 40% in fiscal 2019, while QBO Payroll revenue was up 35%. TSheets users grew about 60 percent to cross the one million mark. The Consumer segment also beat Street expectations.

In the fourth quarter, subscriber growth at QBO International accelerated to 58%, Beck said.

KeyBanc's price target revision reflects a "broad opportunity set spanning SMB and consumer," he said. 

Price Action

Intuit shares were trading higher by 5.6% at $291.18 at the time of publication Friday. 

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