Intuit stock price cup and handle pattern pointing to more gains

Intuit (INTU) is a large American company that offers several products like Turbotax, Credit Karma, Quickbooks, and Mailchimp. 

Turbotax helps individuals file taxes, while Credit Karna offers credit scores to millions of companies. Quickbooks is a firm that provides accounting tools, mostly to small and medium-sized companies. Mailchimp, which it acquired for $12 billion, provides email marketing solutions. 

Intuit’s business has changed in the past few years, which has helped it become a major player in the Software as a Service (SaaS) company. It has also made big purchases that have made it expand its business to other industries. 

Intuit’s annual revenue has grown from over $7.6 billion in 2019 to over $16.28 billion in the last financial year. Its annual profit has also moved from over $1.8 billion to $2.9 billion, a trend that may continue in the next few years. 

Intuit stock price was trading at $635 after rising by 581% in the last decade. This growth has pushed its market cap to over $178 billion. Its HypeIndex has risen to 256%.

Positive hype

• Intuit’s positive hype has jumped because of its strong revenue growth. Its annual revenue has jumped to over $16.2 billion and analysts expect that the trend will continue.

• The company’s revenue continued growing in the last quarter, rising by 10% to $3.28 billion. This growth was driven by Credit Karma whose revenue rose by 29% to $524 million. The Global Business Solutions revenue jumped by 19%, helped by payroll, MailChimp, and money.

• Intuit has a strong market share in key industries that experience low churn. For example, a company using QuickBooks is hard to move to its competitors like FreshBooks, Xero, Zoho, and Wave Accounting.

• Intuit boosted its forward guidance for the year. It expects that its revenue will grow by between 12% to 13% to between $18.1 billion and $18.34 billion. Its operating income will be between $7.24 billion and $7.31 billion.

• Analysts expect that Intuit’s revenue will cross the $20 billion level in 2025, while its earnings per share will be $22.08.

• They are optimistic that the stock will jump to $724 from the current $636, representing a 15% upside.

• The stock has formed a cup and handle pattern, which is a popular bullish continuation sign.

• Intuit is also a higher-margin company than other SaaS companies. It has a gross margin of 80% and a net income margin of 17%.

Negative hype

• The stock has formed a shooting star pattern on the weekly chart. This pattern is made up of a small body and a long upper shadow, pointing to a reversal.

• Intuit is a highly overvalued company. It has a forward price-to-earnings ratio of 51.4, higher than the sector median of 30.7. The forward EV to EBITDA ratio of 25 is also higher than the median of 21.

Intuit stock price analysis

On the weekly chart, we see that the Intuit share price has moved sideways in the past few weeks. This consolidation is part of the formation of the cup and handle pattern. This pattern is made up of a rounded bottom pattern followed by some consolidation.

Intuit shares have moved above the 50-week and 200-week Exponential Moving Averages (EMA). It has also risen above the Ichimoku cloud indicator.

Therefore, because of the shooting star pattern, there is a likelihood that it will drop for a while before bouncing back. A move above $715 will point to more upside. 

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HypeIndex is an AI platform that detects Hype in stocks and cryptos before it moves the market, providing reliable early detection for profitable investment opportunities.

The algorithm for our proprietary HypeIndex score is based on sentiment analysis, data science and machine learning.