3 Reasons Intuit Will Continue To Dominate The Tax Business
by John Smith TechnicianWell Fargo Securities, the American international banking and financial services holding company believes Intuit Inc. is well established to raise double-digit revenue and earnings growth over the coming years. This was calculated on share profit in the constant and highly profitable consumer tax business as well as the large Greenfield opportunity in the QuickBooks online business from development into self-employed and global markets.
The company has improved its rating on the shares of Intuit to OutPerform and also increased its price target from $110 to $163. Intuit Inc. has taken over most of the small business along with the consumer tax markets, with two of its flagship products, noted Siti Panigrahi, Analyst at Wells Fargo Securities. These products are TurboTax and QuickBooks.
1. 1. QuickBooks Online Growth
According to Wells Fargo, Intuit made the most of the increasing cloud adoption and quick rise of smartphones by making itself as an online platform. From this, the firm observed that the company capitalized on cloud solution adoption by previously non-consuming customers.
The firm also observed that Intuit’s QuickBooks online user base has increased to 80% of the total QuickBooks users in this year. In 2012, it was only 24 percent. The firm said, “The two secular trends- the rise of the gig economy and the workforce demographic shift to millennials- have came out as one of the biggest drivers behind subscriber growth for both TurboTax and Quickbooks. They have also shown a sign that global expansion has lead to the subscriber growth.
2. High-Margin Consumer Business
Siti Panigrahi believes rise in the DIY (do-it-yourself) category share, in which Intuit has a share of 65% along with TurboTax market share, are two big things for the firm attaining sustainable mid-to-high single digit revenue growth and increasing segment margins above 63%. As per the analyst, this margin of consumer business remains defensve during a recessionary period.
3. Conservative QBO Subscriber Estimate
The company calculated approximately 3.359 million QBO subscribers in the year of 2018. These subscribers are increasing 14% per year. We can compare this to the guidance of up to 45% growth in the year of 2018 and the 2017 actual growth of 57.5%. The company said that its QBO guess implied a QBO self-employed subscriber growth of 64.8% in 2018, which is an outstanding declaration from 358.8% in 2017. Therefore, the company observes the present guidance and approximation for QBO subscribers as conventional. The estimate for market penetration in 2018 is also conservative, Well Fargo Securities added.
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Created on Sep 22nd 2017 03:44. Viewed 438 times.