Intuit Inc (NASDAQ:INTU) successfully transitioned to a subscription-based model while also showing additional upside from generative artificial intelligence (AI).
The Intuit Analyst: RBC Capital Markets' Rishi Jaluria initiated coverage of Intuit with an Outperform rating and price target of $760.
The Intuit Thesis: Around 80% of Intuit's revenue is generated by recurring subscriptions. The company has achieved "greater platform expansion," Jaluria said in the initiation note.
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Platform revenues now represent 77% of Intuit's total revenues, versus 53% five years ago and the mix-shift in favor of subscription and cloud would drive "better unique economics," he added.
Intuit enjoys a market leadership position in tax and accounting software, which should be a tailwind as "tax codes and regulations become increasingly complex," the analyst wrote.
Tax preparation and SMB accounting are "very services-heavy industries," Jaluria says. GenAI gives Intuit's customers the ability to automate and generate cost savings.
He added that the company's non-GAAP and GAAP operating margins could reach around 40% and 30%, respectively, in fiscal 2026.
INTU Price Action: Shares of Intuit had risen by 0.66% to $660.52 at the time of publication on Wednesday.
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