On Friday, Intuit Inc. (NASDAQ:INTU) shares rocketed more than 9% after announcing solid fiscal first-quarter 2022 results. The company reported its most recent quarterly results Thursday after markets closed, beating the consensus for analyst expectations. The stock received several price target boosts with Goldman Sachs upgrading to buy from neutral.
The company posted fiscal Q1 non-GAAP earnings per share of $1.53, beating the average for analyst estimates of $0.97. In addition, its GAAP EPS of $0.82 outperformed the estimate of $0.14, while revenue for the period increased by 52.3% from the same quarter in 2020 to $2.01 billion, exceeding estimates by $200 million.
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Goldman Sachs analysts assigned the stock a Street high price target of $840 from $535, with Deutsche Bank, KeyCorp, Piper Sandler, and Barclays also raising their price targets.
Is INTU overvalued?
From a valuation perspective, Intuit shares trade at a steep P/E ratio of 90.97 and a forward P/E of 53.40, making it too expensive for value investors.
However, analysts expect its earnings per share to grow by an average annual rate of about 14.55 over the next five years. Therefore, the stock could be an exciting option for growth investors.
The stock is now up nearly 85% this year following Friday’s spike, thus limiting the short-term upside potential.
Technically, Intuit shares seem to have recently spiked to complete a bullish breakout from an ascending channel formation. As a result, the stock has rallied deep into the overbought conditions of the 14-day RSI.
Therefore, investors could target technical pullback profits at about $645.63, or lower at $604.57, while $716.89 and $749.50 are crucial resistance levels.
It could be time for profit-taking
In summary, although Intuit offers exciting growth prospects, its post-earnings spike pushed the stock price deep into overbought conditions, creating a perfect opportunity for a pullback.
Therefore, given its steep valuation multiples, it could be time to take some profits.
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