Updated from March 20

No one defies gravity forever. Not even

Intuit

(INTU) - Get Report

, which has soared above the rest of the Nasdaq in the face of an ever-weakening economy.

Intuit fell to earth Friday as investors reacted to news that the company had slashed its forecast for fiscal 2003 sales and earnings by about 6%. By the end of the day, a stock that closed Thursday at $50.89 prior to the announcement, had tumbled $12.17, or 23.9%, to $38.72 by the end of regular trading Friday. Until its fall, Intuit had risen 29% in the prior 12 months, compared with the Nasdaq's 25% dip during the same period.

"Investors can no longer ignore the economic sensitivity of some of Intuit's businesses," wrote analyst Glenn Greene who follows the stock for ThinkEquity Partners.

Greene maintained his "equal-weight" rating on the stock, but analyst Bryan Keane of Prudential Financial downgraded the stock to "hold" from "buy" and reduced his price target to $43 from $61.

Intuit's problems this year started with slow sales of its flagship TurboTax software in the early part of the tax season. Even if sales in the last few weeks before April 15 are "Herculean" it's unlikely that the company can save the quarter, Greene noted. Moreover, Intuit's web-based tax service, may well be losing share to irs.gov, a free

Treasury Department

service.

If that were all, the news wouldn't have been so bad. But in announcing reduced expectations, Intuit CEO Steve Bennett said: "We're disappointed to see a sluggish economy worsening in the past few weeks with a further decrease in customer spending in all our categories. This is not an issue with just one of our businesses -- all our businesses have been affected."

Greene noted that sales of Intuit's QuickBooks small-business accounting program, the company's other mainstay, depend on discretionary upgrades. In a slow economy, some discretionary spending simply doesn't happen, he said.

And other growth engines -- vertical solutions, professional tax and small business services -- are also growing revenue more slowly than expected, said Keane. His company does no investment banking.

Factor all that in, and Intuit starts looking pricey, even after Friday's thud. "In our view, the aggressive growth portion of the shareholder base may exit the stock. We could become more aggressive on it at the mid-$30s level," Greene concluded. His company does not have a current investment banking relationship with Intuit.