Ever since Nvidia (Nasdaq: NVDA) announced its 10:1 stock split, the Nasdaq has been on a tear, most recently attaining record status above the 17,000 level. Other industry leaders across sectors of the economy are no doubt paying attention, waiting to make their moves next. Among them, Intuit (Nasdaq: INTU) stock, which offers financial solutions like QuickBooks to individuals and small businesses, appears to have several reasons to implement its own stock split after Nvidia.
Intuit’s stock has ventured into pricey territory now that it’s hovering around the $600 level. The stock is volatile, having traded within a range of $400-$675 in the past 52 weeks. Nvidia stock is also bucking an otherwise bullish trend in the broader markets this year given its 3.5% year-to-date decline.
On the one hand, investors have taken profits off the table from a stock that’s ballooned by 50% since its 12-month low of approximately $400 per share. On the flip side, investors were also spooked after the tax software provider revealed it lost 1 million free Turbo Tax users last quarter.
The financial software company has shifted its focus to more complex tax situations and clients, a strategy that could pay off over the long term in spades. If Wall Street analysts are right on Intuit, the stock has plenty of upside potential, suggesting that a stock split could be in its near future.
Source: Thinkstock
1.) Intuit Shares Are Elevated Over the Past 12 Months
Over the past 12 months, Intuit stock has taken investors on a roller coaster ride. Ultimately, investors who were able to hold on were rewarded with both share appreciation and a $0.90 per share cash dividend distribution.
Analysts are bullish on Intuit stock, with over a dozen “buy” ratings and zero “sells” to speak of. With an average price target on Intuit stock of $720, the Street is not only expecting Intuit to hit a fresh all-time high (from $683 reached in 2021) but also increase by another 20% in the near term.
In its most recent quarter, Intuit beat consensus estimates and lifted its guidance for Q3, including expectations for 13% revenue growth. The company also raised its outlook for operating income and EPS as revenue soars and investments begin to yield positive results.
In response, Jefferies analysts raised their price target on INTU stock to $770, which suggests the stock has plenty of room to run. With such bullish expectations, the topic of a stock split has more than likely come up during board meetings.
2.) Intuit Is a Portfolio Favorite
As a company that was founded in the early 1980s and went public a year later, Intuit has gained a reputation as a bellwether stock in many portfolios. Intuit stock is popular among leading institutional investors including Vanguard, BlackRock and JPMorgan, among others. It’s also frequently traded among hedge funds like Battery Global Advisors, Center Lake Capital Management and Thorntree Capital, to name a few.
Individual investors are quick to compare the performance of Intuit stock to popular fintech names like PayPal Holdings (Nasdaq: PYPL), the latter of who’s stock is essentially flat over the last 12 months and pays no dividend. By the same token, individual investors might be waiting for a pullback in Intuit stock to afford it, which is something a stock split could accomplish. While it wouldn’t change the value of the company, a 2:1 stock split would bring the shares down to $300 apiece, making it more affordable for mainstream investors.
3.) Stock Split History
Since it became a publicly traded stock in 1993, Intuit has completed a trio of stock splits – “a two-for-one stock split on August 21, 1995, a three-for-one stock split on September 30, 1999 and a two-for-one stock split on June 21, 2006,” according to the company’s website. Somewhere along the way, Intuit pulled back from this practice. But the stock didn’t hit the $500 level until last summer, giving the board more reason to revisit a strategy today that could pave the way for more investors to buy the stock tomorrow.
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