Key Takeaways
- Intuit surpassed Q4 expectations with EPS of $4.03 versus the $3.54 consensus and revenue of $4.35B compared to $4.27B anticipated, yet shares plummeted 11% in after-hours trading.
- The company’s FY27 revenue growth forecast of 9-10% represents a significant deceleration from FY26’s 14% growth and falls short of the 12% Wall Street projection.
- Management’s TurboTax growth projection of only 2-3% dramatically underperformed analyst expectations of 6.8%, sparking worries about competitive pressures from AI alternatives.
- Both JPMorgan and Bank of America moved their ratings to Neutral, with JPMorgan dramatically reducing its price target from $605 down to $331.
- Several optimistic analysts including those at Mizuho and Jefferies maintained Outperform/Buy ratings with price targets between $380 and $500.
Shares of Intuit experienced an approximately 11% decline in after-hours trading following the release of its fiscal fourth-quarter earnings, initially falling to $318 before recovering to around $339.75 during Wednesday’s regular session. The stock currently trades down about 3.5% for the day.
The quarterly results themselves painted a positive picture. The company delivered Q4 earnings per share of $4.03, significantly exceeding the $3.54 estimate by nearly 14%. Revenue reached $4.35 billion, representing a 13.6% year-over-year increase and surpassing the $4.27 billion consensus forecast.
However, forward-looking projections drove the sell-off.
For fiscal 2027, management projected revenue in the range of $23.28 billion to $23.51 billion, translating to growth of 9% to 10%. This represents a notable slowdown from the 14% expansion achieved in FY26 and misses the $23.72 billion analyst consensus.
The TurboTax forecast particularly alarmed investors. The company’s projection of merely 2% to 3% TurboTax revenue growth significantly undershot the 6.8% growth rate Wall Street had anticipated. Additionally, Intuit reduced its long-term growth expectations for the Global Business Solutions division to 10-15% from the previous 15-20% range.
Company management cited weakness in Mailchimp revenue, continued deterioration in legacy desktop offerings, and reduced average revenue per TurboTax user following pricing adjustments aimed at customer acquisition as reasons for the conservative outlook.
Analyst Community Responds with Rating Cuts
JPMorgan moved its rating on INTU to Neutral from Overweight while slashing the price target to $331 from $605. According to analyst Samik Chatterjee, disruption threats have spread beyond TurboTax into the QuickBooks-centered Global Business Solutions business. Chatterjee highlighted decelerating customer acquisition across both major product categories and pointed out management’s unwillingness to provide a specific timeframe for returning to double-digit revenue growth.
Bank of America similarly downgraded the shares to Neutral from Buy, reducing its price target to $360 from $400. Analyst Tal Liani suggested TurboTax is surrendering market share to cheaper AI-powered competitors instead of successfully migrating customers toward premium assisted service tiers. BofA observed that online customer growth in the enterprise segment expanded by only 3% on a year-over-year basis.
Both financial institutions anticipate FY27 will involve substantial investment spending, with Intuit implementing reduced pricing and promotional campaigns to strengthen its customer base. This strategic spending is projected to compress profit margins in the short term.
Optimistic Analysts Maintain Positive Stance
Several analysts remained bullish on the stock. Mizuho preserved its Outperform rating with a $430 price objective, highlighting that FY27 profitability guidance exceeded Street expectations. Jefferies upheld its Buy recommendation with a $500 target, down from $550, characterizing the company’s guidance as “conservative.”
BMO Capital and Oppenheimer also retained Outperform ratings with price targets of $412 and $380 respectively. The aggregate analyst consensus currently stands at 24 Buy ratings, 9 Hold ratings, and 2 Sell ratings.
Current Valuation Metrics
At present trading levels, INTU is valued at 13.1x forward earnings estimates with an 8.8% free cash flow yield and impressive 81% gross profit margins. One fair value calculation places the intrinsic value at $557.71, suggesting potential upside of approximately 64% from current market prices.
The company’s non-GAAP EPS guidance for FY27 of $22.88 to $23.12 represents roughly a 15-16% shortfall compared to the previous consensus estimate of $27.30.
The company’s strategic “big bets” initiatives including mid-market solutions, assisted tax services, and money management platforms expanded 34% and now account for 30% of total revenue, though they remain insufficient to counterbalance the TurboTax deceleration.
Investors will get their first opportunity to assess the company’s progress against new guidance when Q1 FY27 results are released on December 1.
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