Intuit Inc.: Shares Climb on Strong Q3 Results

Shares of Intuit Inc. (INTU, Hold) are up over 8% in trading so far today, bucking the trend of steep decline in the broader markets. The company posted an EPS beat in the traditionally strong Q3 and narrowed its guidance range going forward, indicating better visibility into Q4.

Q3 revenue upside was driven by better-than-expected results in QuickBooks, Accounting Professionals, FI’s, and Other Businesses, offsetting weakness in the Consumer Tax segment. The non-GAAP EPS beat was mainly attributable to higher gross margins and effective cost-control measures.

Intuit offers small business accounting, personal finance and tax preparation software for accountants, small businesses and consumers. Q3 non-GAAP EPS of $1.68 came widely ahead of our $1.58 estimate (consensus was at $1.61), while revenues of $1.434 billion also came ahead of our $1.1420 billion estimate.

FY2009 guidance range was lowered to EPS of $1.78-1.82 and revenue of $3.155-3.185 billion from earlier guidance of  EPS of $1.78-1.89 and revenue of $3.13-3.25 billion. The mid-point of the updated guidance range is higher than our current estimates both for revenues of $3.153 billion and non-GAAP EPS of $1.78.

INTU’s current guidance for FY2009 in terms of business segments remains virtually unchanged, excepting the Consumer tax segment. The company now expects this segment to post revenues of $980 – $990 million in Q4 versus prior guidance of $1.004 billion – $1.041 billion, a decline which essentially resulted in lowering of the upper end of the previous guidance range.

Apparently, INTU was not so successful in making up for the lost e-file revenues in Q3 by increasing Desktop prices. On the other hand, Intuit’s aggressive marketing resulted in stronger-than-expected results for its QuickBooks small business software, which saw a 7 percent increase in unit sales year-over-year.

We maintain our Hold rating on shares of INTU.

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