Prudential keeps its underweight rating on Intuit (INTU).
Analyst Bryan Keane says second-quarter earnings per share beat his estimate, but QuickBook growth was stagnant, forcing Intuit to cut the QuickBook fiscal 2004 (July) growth rate to 0% to 10%, from the earlier 15% to 25% estimate. He says revenue growth was driven by higher average selling prices, absent of unit growth running out of gas.
Keane notes Intuit's business model is maturing faster than he expected. He says the company expects a decrease in direct sales, going forward, to be offset by a boost in retail sales. Even if retail sales can pick up the slack, the tax category continues to slow, Keane says. He also thinks Intuit needs a new strategy to drive organic growth.
Keane sees $1.62 fiscal 2004 (Jul.) earnings per share, and $1.93 in fiscal 2005.