2. Intuit Inc. (NASDAQ:INTU)
Number of Hedge Fund Holders: 75
Intuit Inc. (NASDAQ:INTU) provides financial management and compliance products. On August 23, the firm posted earnings for the fourth fiscal quarter, reporting earnings per share of $1.10, beating market estimates by $0.12. The revenue over the period was $2.4 billion, down close to 5.9% compared to the revenue over the same period last year and beating estimates by $80 million. The firm also revealed that it expected revenue growth of approximately 23% to 25% in the first quarter of 2023.
On September 1, Citi analyst Steven Enders initiated coverage of Intuit Inc. (NASDAQ:INTU) stock with a Buy rating and a price target of $538, noting that the firm remains one of the best execution stories in large-cap software.
Among the hedge funds being tracked by Insider Monkey, London-based investment firm Fundsmith LLP is a leading shareholder in Intuit Inc. (NASDAQ:INTU), with 2.3 million shares worth more than $914 million.
In its Q1 2022 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and Intuit Inc. (NASDAQ:INTU) was one of them. Here is what the fund 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 draw-down 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.”
