Intuit (NASDAQ:INTU) stock closed 7.7% lower on November 1 after Bloomberg reported that the company is freezing hiring at its Credit Karma division due to the economic slowdown. Credit Karma is Intuit’s personal finance platform, offering personalized recommendations for financial products. Despite challenges at its Credit Karma unit, analysts maintain a bullish outlook on INTU stock.
Bloomberg report highlighted that the unit is facing revenue headwinds amid a weak economic environment. In response to this news, Intuit reiterated its Fiscal 2023 operating income and earnings per share guidance, which eased selling pressure on INTU stock, which increased by 2.6% in the pre-market session on Wednesday.
The company’s CFO, Michelle Clatterbuck, said that despite the weakness in Credit Karma, INTU would “report first quarter results above guidance.”
During the Q4 conference call, Intuit stated that the Credit Karma vertical is facing challenges from macro uncertainty. Further, on Tuesday, management acknowledged that the segment experienced further deterioration in the last few weeks of Q1.
Intuit expects its top line to increase by 23-25% (including Mailchimp) in Q1. Further, it expects to deliver adjusted EPS in the range of $1.14 to $1.20. Wall Street analysts expect INTU to post earnings of $1.18 in Q1.
Commenting on the recent developments, William Blair analyst Matthew Pfau stated, “In a worsening macro with rising interest rates, Credit Karma is clearly the segment of Intuit’s business most exposed. With the announcement today, it seems clear that Intuit will likely bring down Credit Karma revenue guidance on its first-quarter earnings call.”
Pfau added that Credit Karma’s revenues represent about 14% of the company’s total revenues (based on his Fiscal 2023 forecast). Thus, “even a 25% downside to Credit Karma’s fiscal 2023 revenue would impact total revenue by only 4%.”
The analyst maintains a Buy recommendation on INTU stock.
Conclusion: Is Intuit Stock a Good Buy?
On TipRanks, Intuit stock sports a Strong Buy consensus rating based on 17 Buy and one Hold recommendations. Further, analysts’ average price target of $534.53 implies 35.4% upside potential.
The momentum in Small and Tax businesses will likely support its growth. Its small business is benefitting from higher effective prices, customer acquisition, and the addition of Mailchimp.
Intuit stock has a Smart Score of eight out of 10, implying an Outperform outlook.
