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Intuit Inc. Message Board

  • nolongerretiring nolongerretiring Aug 21, 2009 8:44 AM Flag

    Credit Suisse downgrades INTU- Model Under Pressure

    Downgrading to Neutral, Model Under

    Downgrading to Neutral: INTU reported 4Q09 revenues of $476M ($3M
    better than our est) and in-line EPS of ($0.10). For FY10, INTU issued softer
    than expected consumer tax revenue guidance and pro forma EPS below
    street expectations. We are reducing our FY10 estimates $0.01 to $1.96 and
    issuing our FY11 EPS estimate of $2.26. With upside looking unlikely and
    with INTU's recent history of guiding too aggressively to start the FY, we are
    downgrading shares to Neutral and reducing the price target to $30 from $33.

    Risks Outweigh Reward: Taking a look at INTU's FY10 guidance, we view
    more risks than potential positives, with pricing under pressure. Operating
    leverage is declining due to services mix, pricing, and data center costs
    (1Q10 EPS guidance way below the street). In consumer tax, this year was
    the first time INTU guided below double digit growth to start a FY,
    suggesting potential saturation and pricing pressure. HRB and TaxAct
    promise to price even more competitively this year and the government
    continues to push for lower tax preparation fees. In small business, we are
    hard pressed to find upside and believe the sustainability of a strong QB
    upgrade cycle and price increases in payroll are unlikely.

    Stock Has Had Its Off-season Run, In Our View: As usual, INTU shares
    have outperformed during its seasonally slow period (stock up more than
    34% since May 1st) and we see little outperformance going forward. In fact,
    even if we see an economic rebound, we do not view any upside to tax, QBs
    or payroll in FY10. The next event for INTU will be its annual analyst day on
    Sept 23rd where we will be interested to hear more details on pricing and
    new products

107.820.00(0.00%)Oct 26 4:00 PMEDT