Analysts cheered Intuit Inc. (Nasdaq: INTU) along as it climbed on post-earnings giddiness Friday. The fourth quarter is usually a weak one for the vendor of finance software, but this one wasn't as weak as Wall Street expected.
Shares in the Mountain View, Calif.-based Intuit rose 10 percent, or 8 1/2 up to 91 3/8 Friday morning. The company posted a net loss of $16.3 million, or 26 cents a share Thursday, but First Call's survey of 6 analysts predicted a loss of 33 cents per share. The fourth quarter and first quarters are normally Intuit's slowest periods, because they fall between holiday buying and tax preparation seasons.
CS First Boston said Friday it had raised its rating on Intuit to "strong buy" from "buy." CS First Boston estimated the company's fiscal 2000 earnings at $1.65 per share, based on a belief the company "significantly increase spending on sales and marketing without reducing operating income expectations." Year 2001 earnings by CS First Boston are $1.96.
ABN AMRO also upped the stock from "buy" to " outperform," CS First Boston raised it from "buy" to "strong buy," and Pacific Crest increased its rating from "buy" to "strong buy."
In a research note, ABN AMRO said it is initiating quarterly fiscal year 2000 estimates and raising its fiscal year 2000 estimate to $1.69 from $1.55, reflecting 15 percent revenue growth and improvement in the company's operating margin to about 15 percent from 14 percent.
"Intuit is demonstrating stronger than anticipated growth in its core business," ABN AMRO analyst Jackson Spears said in the research note. In addition, its Internet-based revenue continues to accelerate, he said.
Growth was largely fueled by demand for QuickBooks accounting program, which saw revenue equal to last year's fourth quarter, when Intuit launched a new version of software.
The fourth quarter also saw continued growth in the company's Internet-based business. About $125.3 million, or 15 percent of Intuit's overall revenue in 1999, came from the Internet, and the company's flagship website, Quicken.com, saw page views rise 78 percent year-over-year to 160 million in July.
Intuit is counting on the Internet to continue fueling its growth, said Raymond Stern, senior vice-president for strategy and corporate development in a telephone interview with ZDII.
Stern predicts the company can maintain online revenue growth, and sees a large space of blue sky unclouded by competitors. "There is no one that is a competitor with the full breadth of our offering in electronic finance," Stern said. Though companies like E*Loan and InsWeb, which are edging in on some of Intuit's niches, do require attentive competition, he added.
"So if we can continue to maintain our leadership position, and if the Internet continues to be. a phenomenal vehicle for improving the kinds of interactions that consumers have with respect to their financial lives, we believe that we can continue to see very, very robust growth in our Internet businesses," Stern said.
Reuters contributed to this report.