Intuit Beats in Q1, but Outlook Cautious With Credit Karma Vulnerability; Shares Attractive

Intuit closed its fiscal first quarter with strong beats on the top and bottom lines. However, results were sobered by a fiscal 2023 outlook that bakes in a much more vulnerable Credit Karma amid the macroeconomic backdrop. While management maintained its revenue outlook for all other segments, it now expects Credit Karma revenue to decline 13% year over year (at the midpoint), a stark contrast to former segment guidance of 13% growth (at the midpoint). As a result, we’re lowering our fair value estimate for the wide-moat name to $503 per share from $511. The shares are down about 1% after results to near $375. This still leaves Intuit in attractive 4-star territory, which we think offers a compelling opportunity for long-term investors. We consider Intuit to be a very high-quality wide-moat stock that is often overvalued in more normal economic waters, leaving entry points like these rare, in our view.