Intuit Faces Growing Risks in TurboTax and QuickBooks: Morgan Stanley Analyst

Core Viewpoint - Intuit Inc's stock has been downgraded by Morgan Stanley from Overweight to Equal-Weight, with a price target reduction from $750 to $685 due to increased revenue volatility and risks associated with its business segments [1][3]. Group 1: Analyst Downgrade and Price Target - Morgan Stanley analyst Keith Weiss downgraded Intuit's stock, citing a historical willingness of investors to pay a premium for the company due to its near-monopoly status and lack of cyclicality [1]. - The price target for Intuit has been lowered from $750 to $685, reflecting concerns over revenue volatility since the introduction of Credit Karma and Mailchimp [1]. Group 2: Business Risks - The transition of the TurboTax business from DIY to Assisted is noted as a near-term risk, with high expectations for QuickBooks leaving little room for error [2]. - Increased cyclicality and risks in the business have led to questions about the justification for paying a premium multiple at the current high valuation [3]. Group 3: Valuation Metrics - The analyst applied a PEG ratio of 2.1x, slightly below the historical PEG of 2.2x, leading to a PE multiple of 33x based on an unchanged EPS estimate of $20.83 for 2025 and a growth rate of 15% [4]. - Intuit's fiscal 2025 EPS estimate of $19.65, representing a 17% year-on-year increase, is considered fair, although the current PEG ratio of 2.3x indicates a significant premium compared to peers [4]. Group 4: Stock Performance and Technical Analysis - Intuit's stock is currently trading lower by 1.39% at $635.53, with a 200-day moving average at $616.56, which is below the current price, indicating a bullish signal for some investors [6][7].