Intuit Steams Ahead

Intuit (INTU ) is one tech stock that has survived the wreck. This maker of financial software is up 41% this year--from 34 in February to nearly 50.95 on Oct. 30. Its products let households and small businesses automate tax preparation, payroll, and accounts. "The company has been a standout, beating analysts' estimates," says money manager Tom Galvin of Forstmann-Leff Associates, which has been buying shares. Demand for Intuit software is rising, notes Galvin, as the company continues to develop special products for such businesses as construction and real estate. Tax-preparation software, however, continues to account for 36% of sales.

Although the stock does not seem cheap on a price-earnings basis, it is undervalued based on Intuit's growth rate of 35% to 42% a year, says Galvin, who has a 12-month target of 58 to 62 a share.

Analyst Mary Meeker of Morgan Stanley says what makes Intuit so attractive is its solid growth in revenue, operating income, and cash flow--and its having met or beaten estimates in the past two years. Besides, she says, it has a strong balance sheet, with $3.1 billion in cash, and an intense focus on the bottom line. Management has reiterated its revenue estimates of $1.7 billion to $1.8 billion for fiscal 2003 ending July 31, and operating earnings of $1.30 to $1.35 a share. Meeker figures Intuit will earn $1.31 in fiscal 2003 and $1.75 in 2004. It has the potential for "impressive operating margin expansion in 2003 and beyond," says Meeker, who gives the stock an "overweight" rating. She owns shares, and Morgan has done banking for the company.

By Gene G. Marcial

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