JP Morgan upgrades Intuit after years of underperformance

Investing.com -- JP Morgan upgraded Intuit (NASDAQ:INTU) to "overweight" from "neutral" citing a compelling entry point following a period of significant underperformance and improved structural outlook for its QuickBooks business.

The brokerage raised its price target on the software firm to $660, noting that Intuit shares have lagged the S&P 500 by about 3,700 basis points over the past 3.5 years, despite the company’s durable growth fundamentals and expanding margins.

A valuation reset has been the primary driver of the underperformance. The firm sees this level as offering an attractive risk-reward dynamic relative to broader market valuations.

The brokerage pointed to strength in Intuit’s QuickBooks segment, supported by positive customer survey data and improving web traffic trends. It also noted strong upmarket traction for the Intuit Enterprise Suite, which is gaining adoption among businesses with over $10 million in revenue.

There is a potential tailwinds from small and mid-sized business adoption of AI-driven tools, including Intuit Assist, which it believes could benefit from relatively faster adoption in this segment compared to larger enterprises.

While the tax business remains a secondary focus for the firm, there is an encouraging commentary from Intuit on TurboTax’s performance early in the tax season.

Despite macroeconomic uncertainties and potential policy risks, the risk-reward profile are favorable at current levels, with brokerage maintaining a constructive long-term outlook on Intuit’s core businesses.

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads.Should you invest $2,000 in INTU right now?

Before you buy stock in INTU, consider this: ProPicks AI are 6 easy-to-follow model portfolios created by Investing.com for building wealth by identifying winning stocks and letting them run. Over 150,000 paying members trust ProPicks to find new stocks to buy – driven by AI. The ProPicks AI algorithm has just identified the best stocks for investors to buy now. The stocks that made the cut could produce enormous returns in the coming years. Is INTU one of them?

Reveal Undervalued Stocks Now