Why Intuit Shares Might Keep Rallying

While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a look at particularly stock-shaking analyst upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of Intuit (NASDAQ: INTU  ) climbed 1.5% today after Bank of America upgraded the accounting software specialist from neutral, to buy.

So what: Along with the upgrade, analyst Kash Rangan raised his price target to $78 (from $69), representing about 16% worth of upside to yesterday's close. While value investors might be turned off by the stock's steady surge since late June, Rangan believes that continued growth at its small-business segment should fuel even further price appreciation.

Now what: BofA likes Intuit's risk/reward trade-off at the current levels. "We are upgrading INTU, as we see a changing in guard with the SMB business growing increasingly important," wrote BofA. "With consumer tax expectations moderating, we believe the opportunity in SMB/Pro Tax will be increasingly apparent." With Intuit shares surging to a new 52-week high today and trading at a 20-plus P/E, I'd wait for some of the enthusiasm to fade before betting too much on those prospects.

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  • Report this Comment On October 19, 2013, at 2:54 PM, MikeBlockCPA wrote:

    This is ridiculous. Xero more than doubles users annually, as QuickBooks loses users. QB lost 70% of add-on links, while Xero doubled add-ons. Xero stock rose 2400% in 5 years, 15 times faster than Intuit. This week Xero raised $150 million, mainly from U.S. venture capital stars, to compete against QuickBooks in the U.S, so Xero stock jumped 50% MORE.

    QuickBooks Online already had to increase discounts from 10% to 50%, but many would rather go to the dentist than use it. Intuit will soon do what it did to compete against Microsoft - have permanently free QuickBooks copies. Therefore, future earnings will be much lower.

    Intuit insiders sell about a billion a year in stock and only buy minor option stock. Intuit buybacks were more than lifetime retained earnings. Stockholder equity was $2.7 billiion in 2012. It lost $300 million on a Digital Insight sale, so adjusted equity was $2.4. It expects $2.4 billion in extra buybacks, which is effectively liquidating (3 years of net income).

  • Report this Comment On October 20, 2013, at 12:24 PM, MikeBlockCPA wrote:

    Here is one more way Intuit is cutting revenue and cutting its throat (exactly as I said):

    QuickBooks Online Now Free for A Year For Canadian Startups,

    http://blog.intuit.ca/quickbooks-online-free-for-a-year/#sth....

    No one could ever pay many of us to use QBO for long, so having Intuit suddenly bleed for us will not make it any more attractive.

  • Report this Comment On October 21, 2013, at 1:02 AM, MikeBlockCPA wrote:

    Intuit stock also will dive because two-thirds of new Xero sales now come from professional accountants.

    An Intuit survey showed it should sell through these small business trusted advisers, but it repeatedly antagonized us instead. It did so with ads that told users they did not need us for taxes and bookkeeping, while asking us to supplement inadequate tech support, cut taxes and clean up endless messes. It also antagonized us with direct and retail prices that undercut our discounts.

    Most important, it antagonized us with the biggest diploma mill, selling 68,000 so-called QuickBooks Professional Advisor certificates without tests. It did so after its survey showing that untested so-called Advisors caused all Advisor complaints. It also repeatedly referred users to untested Advisors knowing its survey showed this sharply cut the income of tested QuickBooks Certified ProAdvisors.and wasted about $1 billion a year for end users.

    Intuit even used a Certified ProAdvisor title with the CPA initials of our well know Certified Public Accountant brand, thereby cheapening it, after many objections.

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