Intuit: Long-Term Compounder Back To Attractive Valuation After 18% Fall

(Preview) Company Update (INTU US)

Summary

• Intuit stock has fallen below $600 for the first time since October 2021, and is now 18% below its 52-week high in November.

• Shares are at just over 50x pro forma FY22 EPS. Even assuming a further de-rating to 42x, we believe they can be a good investment.

• The $12bn acquisition of Mailchimp expands the Intuit platform into marketing tools, significantly enlarging the addressable market.

• Intuit has reaffirmed long-term targets, which imply a double-digit EPS growth; Q1 FY22 results were strong and the outlook was raised.

• With shares at $586.39, we expect a total return of 25% (8.0% annualized) by July 2025, still an attractive risk/reward. Buy.

Introduction

We review our investment case on Intuit after its stock price fell below $600 for the first time since October 2021 on Wednesday (January 5). Intuit shares are now down 18% since their 52-week high in November.

We initiated our Buy rating on Intuit in September 2019. Even after the recent correction, Intuit shares have gained 120% (…