Intuit (INTU) shares plummet 11% as 2027 forecasts disappointed Wall Street

Key Points

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Key Points

Intuit's fiscal fourth-quarter results exceeded expectations, with earnings per share of $4.03, higher than market expectations of $3.54; revenue of $4.35 billion, better than expectations of $4.27 billion. However, shares plunged 11% after hours.

Fiscal 2027 revenue growth is expected to be 9%-10%, slowing down from 14% in fiscal 2026 and lower than Wall Street's forecast of 12%.

TurboTax's business expansion forecast is only 2%-3%, far below analysts 'expectations of 6.8%, triggering market concerns about intensified competition for artificial intelligence.

JPMorgan Chase and Bank of America have both downgraded Intuit to neutral, with JPMorgan Chase significantly lowering its target price from $605 to $331.

Optimistic analysts, including Mizuho and Jefferies, maintain an outperform rating with price targets ranging from $380 to $500.

Analysts downgrade

Intuit's shares fell about 11% to $318 in after-hours trading before recovering to about $339.75 in Wednesday's trading session. The stock fell about 3.5% on the day.

Intuit Inc. (INTU)'s actual financial performance is impressive. The company's fiscal fourth-quarter earnings per share were $4.03, well above expectations of $3.54, or nearly 14%. Revenue reached US$4.35 billion, a year-on-year increase of 13.6%, and also exceeded Wall Street's forecast of US$4.27 billion.

However, what triggered the sell-off was its future performance outlook.

The company expects revenue in fiscal 2027 to be between US$23.28 billion and US$23.51 billion, a year-on-year increase of 9% to 10%. This marks a slowdown from the 14% growth rate in fiscal 2026 and is also below Wall Street's forecast of $23.72 billion.

TurboTax's expectations are particularly worrying for investors. Management expects TurboTax to grow only 2% to 3%, well below analysts 'expectations of 6.8%. In addition, the company lowered its long-term growth forecast for its global business solutions division to 10%-15% from the previous 15%-20%.

The company attributed the downgrade to weak performance of Mailchimp's business, continued decline in desktop products, and a decline in TurboTax's average revenue per user after adjusting pricing to attract a broader customer base.

Analysts downgrade

JPMorgan downgraded Intuit's rating to neutral from overallocation, and significantly lowered its target price from $605 to $331. Analyst Samick Chatterjee said the competitive threat has gone beyond TurboTax and has begun to affect the global business solutions division with QuickBooks at its core. Chatterjee pointed out that user acquisition on both platforms was slowing and observed that management refused to provide a timetable for returning to double-digit growth.

Bank of America also downgraded the stock to neutral from buy, and lowered its target price to $360 from $400. Analyst Tal Liani believes TurboTax appears to be ceding market share to cheaper AI-driven competitors rather than successfully turning users into high-end auxiliary services users. Bank of America pointed out that online customer growth in the corporate sector increased by only 3% year-on-year.

Both financial institutions expect to involve significant investments in fiscal 2027, and Intuit will adopt aggressive pricing and promotional strategies to restore user growth. Such spending is expected to put pressure on margins in coming quarters.

Optimistic voices remain

Not all analysts have turned bearish. Mizuho maintains an outperform rating with a target price of US$430, emphasizing that its fiscal year 2027 profit forecast exceeds Wall Street expectations. Jefferies maintained its buy rating and lowered its target price to $500 from $550, calling the performance guidance "conservative."

Bank of Montreal Capital Markets and Oppenheimer also maintained outperform ratings, with target prices of $412 and $380 respectively. The overall consensus rating is 24 buys, 9 holds and 2 sells.

Current valuation indicators

Based on current prices, Intuit's forward P/E ratio is 13.1 times, free cash flow yield is 8.8%, and gross margin is 81%. Fair value calculations estimate the stock at US$557.71, which has a potential upside potential of approximately 64% from current levels.

Non-GAAP earnings per share guidance for fiscal year 2027 is US$22.88 to US$23.12, which is approximately 15% to 16% lower than previous market expectations of US$27.30.

The "big moves" business, which includes mid-market products, ancillary tax services and money management solutions, grew 34%, and now accounts for 30% of total revenue, but still not enough to offset TurboTax's slowdown.

A preliminary assessment of the revised guidance will depend on fiscal 2027 first-quarter financial results, which are scheduled to be released on December 1.