Brean Raises Intuit's Price Target, Citing 'Steady Business Trends Driving Steady Growth'

Intuit Inc. (NASDAQ: INTU) reported robust F3Q results, driven by the strength in its consumer tax business and stable business trends in its QuickBooks-driven small business group (SBG).

Brean Capital’s Yun Kim maintains a Buy rating on the company, while raising the price target from $125 to $130.

SBG Drives Results

Kim mentioned that the company posted strong revenue for SBG, ahead of the consensus and the estimate.

“While there are some investor concerns regarding the company's ability to meet its FY17 QBO subscriber growth target, we see very little risk to that target given that its international QBO sub growth will reaccelerate, while it continues to execute in its Self-Employed business and improve retention in its core QBO subs,” the analyst mentioned.

Related Link: Deutsche Bank Expecting Solid Results Out Of Intuit

In addition, Kim pointed out that online attach rates were becoming less meaningful for Intuit, as the company focuses on attracting new small businesses that are still in their nascent stages.

“We believe overall SBG operating margin could be a better indicator of overall monetization of its QuickBooks installed base and also a better measurement of its discipline regarding the investment/spending it is making to drive new QBO sub adds,” the analyst said.

QBO Subscribers

Total QuickBooks subscribers grew 45 percent during F3Q to reach 1,397,000, in line with the consensus but ahead of the estimate and guidance.

Kim noted that the “Self-Employed” version of continued to drive a higher mix of new subscriber additions for QBO, consistent with Intuit’s long term growth strategy.