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5. Intuit Inc. (NASDAQ:INTU)
Number of Hedge Fund Holders: 82
YTD Share Price Decline as of June 30: 38.96%
Intuit Inc. (NASDAQ:INTU) is a California-based company that specializes in financial software, offering products including TurboTax, QuickBooks, Mint, Credit Karma, and Mailchimp. Intuit Inc. (NASDAQ:INTU) stock has dropped about 39% YTD as of June 30.
Stifel analyst Brad Reback on May 25 reaffirmed a Buy rating on Intuit Inc. (NASDAQ:INTU) but lowered the price target on the shares to $465 from $580, citing “solid” fiscal Q3 results regardless of “a somewhat lackluster tax season”, driven by solid growth from Credit Karma and Mailchimp. Management also pointed out that it is not witnessing indicators of economic weakness within its business, though it will be impossible to completely avoid a slowing domestic economy, the analyst added.
According to Insider Monkey’s Q1 data, Intuit Inc. (NASDAQ:INTU) was part of 82 hedge fund portfolios, with combined stakes exceeding $6 billion. Terry Smith’s Fundsmith LLP is the biggest stakeholder of the company, with 3 million shares worth $1.4 billion.
In its Q1 2022 investor letter, Baron Funds mentioned Intuit Inc. (NASDAQ:INTU). Here is what it said:
“At the company-specific level, with 59% of our holdings posting double-digit declines during the quarter, we had no chance to hold up against the Index that was down less than 5%. The good news is that for the most part, this drawdown did not result in a permanent loss of capital and in many cases, we believe fundamentals have remained robust or improved even though stock prices declined. One example is Intuit (NASDAQ:INTU), the leading provider of accounting software, and our second largest detractor in the quarter. The stock lost 25% of its value (or over $45 billion) due to a miss in quarterly revenues, which was driven by a slower start to the tax season, leading the company to miss consensus estimates for consumer revenues by about $190 million. The slower start to the tax season is of course insignificant to the intrinsic value of the business, as everyone knows there are only two certainties in life and one of them is – TAXES! And so, naturally, Intuit reaffirmed its annual projections. Moreover, results in other segments were ahead of expectations. CEO Sasan Goodarzi explained the outperformance during its quarterly conference call by saying:
‘We have a nearly $300 billion addressable market driven by tailwinds that include a shift to virtual solutions, an acceleration to online and omni-channel capabilities, and digital money offerings. This, combined with the team’s excellence and execution is contributing to the strength of our performance.’
More specifically, Intuit is gaining market share in tax filings (“we are on track to gain share overall again this season”), continues expanding its QuickBooks online offering, which was up 35% year-over-year, and is seeing strong synergies from its Credit Karma acquisition, driven by Intuit’s Lightbox technology, which allows better personalization of offerings to customers (for example, it “doubles the average approval rate for members who apply for credit cards on Credit Karma versus outside of Credit Karma”). The bottom line is that our estimates of Intuit’s intrinsic value were up while the stock price was down and therefore our future expected return has increased.”