plunged Thursday, a day after the tax and small-business software maker lowered its revenue outlookfor recent acquisitions but beat estimates and raisedguidance. Investors also may have decided to take someprofits following the stock's recent run-up.
Analysts credited Intuit with reporting a solid
first quarter Wednesday, with the company beating estimates and raisingguidance for the full year. The company reported a 32%year-over-year increase in first-quarter revenue andbeat earnings estimates by 2 pennies.
"The only negative thing that anyone could pointto was the growth expectations for some of theacquisitions are a little slower," said ThinkEquityanalyst Glenn Greene, who has an equal weight ratingon Intuit. (His firm hasn't done any banking withIntuit.)
On a conference call Wednesday, Intuit lowered itsrevenue growth projections for its business verticalssegment -- which produces software targeting specificvertical industries such as construction -- to 10% to30% in fiscal year 2003. That's down from previousgrowth estimates of 30% to 50% for the segment, whichwas built through a handful of acquisitions in thepast year.
The products in the business verticals segment aresignificantly more expensive -- selling for as high as$100,000 for a license fee -- than other Intuitproducts and consequently have been hurt more by thedownturn in IT spending, much like large enterprisesoftware vendors, analysts said.
However, in a note Thursday, Jefferies analystCraig Peckham called the new growth estimate "stillrespectable" and noted that revenue from the verticalsegment accounts for only 6% of full-year sales.Peckham has a buy rating on Intuit and his firm hasn'tdone banking with Intuit.
In addition to reacting to the reduced outlook forthe verticals segment, analysts said investors may have simplydecided to take some profits on their Intuit shares,which have soared 27% since the beginning of the year. Shares of Intuit declined $3.99, or7.6%, to $48.87 in recent trading Thursday.
UBS Warburg analyst Michael Wallace characterizedIntuit as a "safe stock but an expensive stock" in anote Thursday. At $53, shares were trading at 38 timeshis new fiscal-year 2003 earnings estimate of $1.38."It is hard to make a case for a much higher multiplegiven that internal revenue growth withoutacquisitions is 15% to 20%," wrote Wallace, who has ahold rating on Intuit. His firm hasn't done anybanking with Intuit.