the actions of Intuitiveness ( NASDAQ: ) rose more than 4% in Wednesday’s trading session after the company announced a comprehensive price increase for QuickBooks that will take effect in the first quarter of fiscal 2025.
In response to the announcement, Jefferies analysts said they believe the price increase announced by Intuit ( INTU ) for its QuickBooks product points to a favorable outlook for the company’s future revenue growth.
Intuit’s ability to raise prices for its small business products is expected to be a positive factor for fiscal 2025, according to a Jefferies report. The firm maintains a positive Buy recommendation on the stock and sets a target price of $770.
The upcoming price adjustments, scheduled to begin in Intuit’s first quarter of fiscal 2025 (ending October 2024), will apply to most QuickBooks Online (QBO) and QuickBooks Desktop (QBD) offerings, including payroll services.
Jefferies sees these pricing changes as a potential factor in raising its fiscal 2025 revenue forecast.
“These pricing adjustments are likely to boost preliminary FY2025 earnings forecasts, which will beat the current market consensus of 12.2% growth and could indicate an acceleration from the 12.7% growth estimated for FY2024.
While Jeffries acknowledges that QuickBooks Desktop products are still cheaper than QuickBooks Online, he believes the price increases are reasonable. He also predicts that the price increase will lead to more customers switching to QuickBooks Online.
Jefferies highlights the consistent revenue growth of Intuit’s Small Business division, reporting 18% year-over-year growth for the past three consecutive quarters. Current analyst forecasts for revenue growth in fiscal 2025 range from 14.3% to 15.5%, which Jefferies says may be conservative given recent price increases.
“Rising prices could help raise revenue forecasts for fiscal year 2025,” the report noted. Jefferies’ forecast for fiscal 2025 total revenue growth is 11.5%.
Overall, Jefferies expresses confidence in Intuit’s potential for sustained growth despite potential economic challenges facing small businesses. The agency highlights the stability of the tax and small business divisions, the expansion of Live Expert’s services and the company’s solid financial health as reasons for the positive outlook.
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