Key Takeaways
- Intuit delivered a strong Q4 performance with EPS of $4.03 versus the $3.54 estimate and revenue reaching $4.35B compared to $4.27B expected, yet shares tumbled 11% in after-hours trading.
- The company’s FY27 revenue growth projection of 9-10% represents a significant deceleration from the 14% achieved in FY26 and falls short of Wall Street’s 12% expectation.
- Management’s guidance for TurboTax expansion of merely 2-3% dramatically undershot analyst projections of 6.8%, sparking worries about competitive pressure from AI-driven alternatives.
- Major financial institutions JPMorgan and Bank of America downgraded INTU to Neutral, with JPMorgan dramatically reducing its price target from $605 down to $331.
- Optimistic analysts from Mizuho and Jefferies maintained their Outperform and Buy ratings respectively, setting price targets between $380 and $500.
Shares of Intuit experienced a sharp decline of approximately 11% during after-hours trading following the release of its fiscal fourth-quarter results, initially touching $318 before recovering to around $339.75 in Wednesday’s regular session. The stock is presently trading down about 3.5% for the day.
From a purely earnings perspective, the results were impressive. The software giant reported fourth-quarter earnings per share of $4.03, significantly surpassing the $3.54 estimateāa beat of nearly 14%. Total revenue reached $4.35 billion, representing a 13.6% increase year-over-year and topping the $4.27 billion Wall Street consensus.
However, it was the forward-looking guidance that triggered the sell-off.
Company executives provided FY27 revenue guidance ranging from $23.28 billion to $23.51 billion, suggesting growth of just 9% to 10%. This marks a substantial slowdown from the 14% expansion achieved in FY26 and disappoints compared to analyst expectations of $23.72 billion.
The TurboTax projection particularly alarmed investors. Management forecasted a modest 2% to 3% growth rate for the tax preparation platform, dramatically below the 6.8% analysts had anticipated. Additionally, the company revised its long-term growth expectations for the Global Business Solutions division downward to 10-15% from a previous target of 15-20%.
Management cited several factors for the conservative outlook, including disappointing Mailchimp performance, continued deterioration in desktop product sales, and reduced average revenue per TurboTax user following strategic pricing adjustments aimed at customer acquisition.
Analyst Downgrades Follow Guidance Miss
JPMorgan moved its rating on INTU to Neutral from Overweight while slashing its price target to $331 from $605. Analyst Samik Chatterjee expressed concern that competitive disruption has spread beyond TurboTax and is now impacting the QuickBooks-centered Global Business Solutions business. Chatterjee highlighted weakness in new customer acquisition across both major product categories and pointed out that management avoided providing a specific timeframe for returning to double-digit revenue growth.
Bank of America similarly downgraded the stock from Buy to Neutral, reducing its price target to $360 from $400. Analyst Tal Liani suggested that TurboTax is experiencing market share erosion to budget-friendly AI-powered competitors rather than successfully migrating users to premium assisted services. BofA observed that online customer growth in the enterprise division increased by only 3% year-over-year.
Both investment banks anticipate FY27 will require substantial investment, with Intuit implementing aggressive pricing strategies and promotional campaigns to revitalize its customer base. This spending is projected to compress profit margins in the coming quarters.
Some Analysts Remain Optimistic
Several analysts maintained positive outlooks. Mizuho preserved its Outperform rating with a $430 price target, highlighting that FY27 profitability projections exceeded Street expectations. Jefferies retained its Buy rating with a $500 target, reduced from $550, characterizing the guidance as “conservative.”
BMO Capital and Oppenheimer also maintained Outperform ratings with targets of $412 and $380 respectively. The aggregate Wall Street consensus stands at 24 Buy ratings, 9 Hold ratings, and 2 Sell ratings.
Current Valuation Metrics
At today’s trading levels, INTU is valued at 13.1x forward earnings with an 8.8% free cash flow yield and 81% gross profit margins. A fair value analysis suggests the stock could be worth $557.71, representing potential upside of approximately 64% from current trading prices.
Non-GAAP earnings per share guidance for FY27 was set at $22.88 to $23.12, falling roughly 15-16% below the previous consensus estimate of $27.30.
The company’s “big bets” strategyāencompassing mid-market solutions, assisted tax services, and money management offeringsādelivered 34% growth and now accounts for 30% of total revenue, though these segments haven’t yet grown large enough to compensate for the TurboTax deceleration.
Investors will get their first opportunity to evaluate the new guidance framework when the company reports Q1 FY27 results on December 1.
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