Jefferies said the market's selloff in Intuit following the company's earnings report was disproportionate to the size of the miss, according to a note to investors on Thursday.
Analyst Brent Thill described the market reaction as "harsh on 1 pt lower FY26 guide for tax," pointing out that the shortfall in TurboTax represents only about one quarter of Intuit's overall business. He emphasized that the other three quarters - small and medium business and Credit Karma - beat expectations.
The firm further noted that Intuit's tax segment has outperformed estimates in four of the prior seven fiscal years and said it should rebound following the recent disappointment.
Jefferies flagged valuation as a key consequence of the selloff. Intuit shares were trading after hours at 12 times calendar year 2027 price-to-earnings, a multiple the firm said was last recorded in 2009 during the global financial crisis. That level is also below management's commitment to at least mid-teens medium-term earnings per share growth.
Thill wrote, "Hard to see P/E fall below 10x, or ~$280 level." The stock was down 16.9% in premarket activity.
Despite the pullback, Jefferies highlighted several positive operational datapoints from Intuit's results. TurboTax Live revenue grew 36% in fiscal 2026. Credit Karma generated $631 million of revenue, a figure Jefferies said beat both the firm's and Street estimates by a wide margin. In addition, mid-market online solutions revenue expanded by approximately 38% year-on-year.
Balancing the company's solid performance across most businesses with the tax guidance miss, Jefferies reduced its price target to $550 from $650, using a 14 times EV/EBITDA multiple as the basis for the revision. The firm, however, kept its Buy rating on the stock.
On the competitive and technological front, Jefferies reiterated its view that perceived threats from artificial intelligence to Intuit are overstated, saying the company "continues to believe AI threats are more perceived than real." The firm pointed to Intuit's historical record of delivery, noting it has "consistently delivered despite occasional quarterly volatility."
Context and implications
Jefferies' note frames the post-earnings multiple compression as an overreaction to a narrowly focused guidance downgrade in the tax business, while underscoring stronger-than-expected results in other segments. The firm adjusted its valuation target downward but stopped short of changing its positive stance on the company.